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    July 16, 2011
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to the private sector. you need an educated populace for jobs. let's get together. let's stop bickering. let's get things done here. host: governor peter shumlin of vermont joining us from salt lake city, utah, from the national governors association meeting. thank you for your time. guest: thank you for having me. host: tomorrow, we talk about politics with the editor in chief of thinkprogress.org and the vice-president for american progress. we will talk about how activists feel toward president obama, his politics, and discussions about the debt ceiling. also joining us to talk about airport security, clark kent ervin, from the department homeland security in 2004 in light of a gao report about
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perimeter securities. we are attempting to get a republican governor to join us tomorrow for the program to talk about issues from their state and nationwide. that will be on "washington journal" tomorrow at 7:00 a.m.. we will see you then. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] ♪ ♪ >> up next, a discussion on unauthorized telephone charges. after that, we look at the u.s. economy would senator al franken, congressman sander
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levin, and richard trumka. and later jeffrey imelt. we will have remarked from governors from the national governors' convention. that is live at 5:30 p.m. eastern on c-span. next week as the one-year anniversary of president obama's signing the dodd-frank act into law. on monday, a public meeting with the oversight council created under the legislation and chaired by treasury secretary tim geithner. the mandate is to identify and manage risks that threaten financial stability. you could watch live monday at 11:30 a.m. on c-span 2. >> i am very interested in what i call disappearing america.
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america that may not be here 25 years from now. >> for 30 years, carol highsmith has traveled the world documenting the country through our camera lens. follow her story sunday night on "q &a." we will have an original documentary, "the library of congress." >> you are watching c-span, bringing politics and public affairs for it every morning it is "washington journal" about the news of the day. weekdays, watch live coverage of the u.s. house of weeknights congressional hearings and policy forums. also supreme court or a document written on the weekend, you could see our signature interview programs. you can also watch our programming any time at c- span.org and it is all
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searchable on our cspan video library. cspan, washington your way, the public service created by america's cable companies. >> americans could be paying up to $2 billion per year in unauthorized charges on their phone bills. according to a study by the senate commerce committee on cramming which is when phone companies allow third parties to add charges to landline phone bills. we will look at the committee's hearing. this is about an hour and a half. >> good morning, this hearing will come to order. today's hearing is about a scam that has cost telephone customers billions of dollars.
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all of you at this table are aware of this in various ways. it is called on authorized charges. the telephone company can have authorized charges if you want to buy dish tv or something, that as an authorized to charge. the great percentage of on authorized charges --un authorized charges appear on the bill. a person who does not carefully read the bill which is four or five pages long, sees this thing and doesn't know what it is. they did not ask for and they did not want it and it is not authorized to be there. legally it should not be there. it is there. it is called cramming and refers to mysterious charges that appear on american phone bills for services that people don't want and don't use and did not
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ask for and should not have to pay for. the companies responsible for these charges don't sell legitimate projects. anything. really sell most of them don't seem to do that. their sole purpose is to place bogus charges and your telephone bill and they are very, very good at that. they hope you will pay your bill every month without looking at it too closely which many people do. of the late 1900's, the congress and the media devoted a lot of attention to the subject of cramming. there were hearings on this and bills were introduced. at the time, consumer advocates and federal authorities in the telecommunications industry all agreed that something needed to be done v. the industry told a pliant
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congress that they would fix the problem themselves. that made sense but they did not want to have -- they wanted voluntary guidelines but they did not want any sort of mandates. they said the industry has a powerful self-interest to correct this. we moved onto other issues because we thought this issue was being addressed and it was not. we know that the cramming problem was not solved. the minute the senate decided to trust the industry, the crammers saw that and moved right back again. american families and businesses have been paying the prices ever since then.
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in this committee, we held a yearlong investigation -- hundreds of thousands of pages, hundreds of witnesses, consumers, businesses, all kinds of folks. we now have a very good idea of how high this price has been. this is what we have learned -- more than a decade after telephone companies implemented their voluntary guidelines, hundreds of cramming companies, we don't know how many, continue to place tens of millions of bogus charges on families and businesses on their land lines. they do that every year. the individual charges are usually small amounts, between $10-$30. when you add that up, it becomes an enormous amount -- it is billions and billions of
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dollars. there is also a cost of cramming that is hard to put a figure on. it is the agony that people go through if they look at their bill. the wonder how to get rid of it. they call the cramming company and nobody answers the phone. they get lost and give up and get mad and feel even less friendly about their congress. it is a problem. one of the questions we have asked is what have the telephone companies been doing for the past decade to protect their customers from these abusive tactics? i was with a major telephone ceo last night and we talked about that. there was not a great deal said. the short answer is, not enough. all telephone companies have nt- cramming policies. they have not made a serious
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effort to keep the cranmer's off their landline phone bills. even when they take a company of the bill, theh crammers come right back in. there are many iterations of their obnoxious behavior. one reason the telephone companies don't crack down on them is because they make money from them. do they make a whole lot of money ofno, but in america money is money. if you can make money, why not? according to the financial information that the committee staff has reviewed, telephone companies earn $1 or two every single time they place a third party, an unautorized third- party bill. that is well over a million
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dollars in profit. my staff released a report revealing how cramming works and how much money it is costing. it is not just american families and businesses but people in particular. i ask unanimous consent to enter this report and other related documents into today's record. hearing no objection? >> no objection. >> it will happen, thank you. although congress and the telephone companies have not been doing enough to protect consumers from cramming, i am glad to say that some state and federal law enforcement agencies have stayed on the job. we will hear from the attorney general of illinois, lisa madigan and she will tell us our office has filed more than 30 lawsuits against crammers and will he will hear about a law that the state of vermont at passed recently to protect its
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citizens against cramming. many other law enforcement facilities have filed lawsuits and shut down crammers but they need to know that crammers , back. they are everywhere --, back. they are everywhere. come right back. they are everywhere. when the shutdown one crammer, new ones appear to take their place. voluntary guidelines will not solve this problem. it is also pretty clear that case by case law-enforcement approach will not work. there are too many crammers written off to many consumers. it is time to do something more about it. one more thing -- there are about to 300 million charges, mostly unauthorized entered onto
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telephone bills each year. that is worth about $2 billion. .0 that is not a lot of money unless you have to pay it. people living on the edge, that is a lot of money. we estimate there have been about $10 billion worth of third-party charges on consumers' telephone bills. we estimate that at&t and quest and verizon have earned more than $650 million. those three companies are earning big money. we've got a real problem here. we want to do the right thing
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and we want to protect people. that is the end of may. i call on senator ihop. >> i want to thank you for holding this important hearing. you and your staff to put a great deal of time and effort into preparing the investigative report the committee released today. i also want to thank those at the federal and state levels who have pushed for the legal action. i want to recognize a former colleague, lisa madigan, the attorney general in illinois who i worked with. she has been active in this field and i welcome heard here this morning. for more than a decade, new hampshire has had a primer for responding to a practice known as cramming. when i served as the state's top law enforcement officer, and oversaw an active protection -- consumer protection bureau which include the publication of
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consumer protection source book and brochures to provide individuals with information how to protect against cramming. in new hampshire, the public utilities commission is authorized to find service providers and bend them from access to the telephone company building apparatus to prevent further harm to consumers. as we continue to examine this issue and discuss how to best address this, we must not lose sight of the fact that cramming affect regular hard-working americans who are being scammed out of their hard earned dollars. we want to recognize that there are legitimate business is providing services to consumers. it is my hope that we will spend some time this morning talking about the prosecution of crammers and how to go after them without strict or fear. of fear
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we're not fully addressing this issue. in addition to the witness is from illinois and the vermont law enforcement who we will hear from today, and i appreciate mr. byrd being here, the ftc and the fcc have brought law enforcement actions against bad actors regarding 11 it cillegitimate charges. the fcc announced yesterday that they will help consumers detect and prevent unauthorized charges. there is ongoing action to help consumers protect themselves. one of the issues this committee will i hope address is whether those steps are sufficient to protect consumers and hold wrongdoers accountable given the clear importance of this issue and the urgent need to find workable solutions that protect the public, i appreciate the work that went into his yearlong investigation. i am disappointed that the
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findings were only released right before the hearing because i would have liked to have heard from our witnesses more an analysis of what their view is of the report. i hope that all of you will feel free to augment the record with your perspective on the yearlong investigation that was conducted by this committee. i appreciate each of the witnesses for sharing their expertise and helping the committee better understand this issue. as a follow-up to this hearing, i believe it is necessary that we hear directly from local exchange carriers, aggregate is, as well as the department of justice, the ftc and the fcc. so that we can hear their perspective on this report and provide additional information as we address this very important issue on behalf of consumers. i look forward to the hearing today and i want to thank each of you for being here. i yield back the balance of my
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time, thank you. >> thank you very much, senator. should we be kind? we have amy klobuchar here. she has another hearing she has to go to. ne might like to say something that leaves mark so we have to figure out -- >> i will pass. senator klobuchar can have as much opportunity as she desires. >> thank you, mr. chairman. the work in this area has been very stable and -- very helpful in our state has been taking this on at the federal and state level. our attorney general joined together and talked about the consumer fraud lawsuits against a company that charged the thousands of minnesota andns for
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service that they did not use. the company is called a cheap to dial at a charge to hundred 57,000 consumers in minnesota for long-distance service fees. -- 200 set -- 257,000 customers in minnesota and nine people used to this service. it is one example of an industry practice that has cost consumers and businesses millions of not billions of dollars. i will never forget the consumers standing there. i think one was a lutheran minister and his wife and she had checked the bill and was able to discover that charge which is not something i would do. it is very hard to consumers to notice these charges because so often, they could be $10, $15, $20, $5 amounts that they would not normally notice on a larger bill.
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that is what you when you added up, it becomes a big chunk of change i am one that believes it should not be up to the consumer to play detective. i believe that phone companies and third-party aggregate is need to crack down on crooks who are stealing from our citizens and their businesses. we need clear rules of the road that prevent this behavior. there has been good things about our deregulated market. it has led to innovation but here are issues that we are seeing like this one where crammers have been exploiting this open market. i applaud the commission for the rule making. i look for to help in any way i can. i look forward to hearing the testimony. i am chairing a issue on judiciary. i may not be here for all the questions but if i am not, i will submit my questions on the record, thank you. >> thank you much, senator
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klobuchar. my vice chairman, senator ayotte will make the next introduction. >> thank you. it is my privilege to introduce the attorney general from illinois, lisa madigan who will provide testimony and has been active in going after crammers in her own state. i know how diligent she is in protecting consumers. thank you, attorney general madigan. >> thank you. i appreciate this opportunity to testify. i want to stress three points that draw my 8.5 years experience investigating and bringing enforcement action against phone bills crammers. number 1 -- most consumers are completely unaware that their
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phone number can be charged almost like a credit card. many consumers will never discovered that there are unauthorized charges buried in their phone bill. my office has yet to see a legitimate third-party charge placed on a consumer phone bills. 3 -- phone bill cramming is such a pervasive problem, i believe the only effective solution is to enact legislation banning third-party charges on phone bills. to give you an overview, ill. individuals, businesses, churches, and government agencies have been filing contains -- complies with the attorney general since 1996. in response, illinois and other states and the ftc have taken a series of law enforcement actions and when we did that initially, it temporarily quelled the problem very we are seeing a strong resurgence in the number of cramming complaints. initially, the phone bill cramming scams were perpetrated
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through telemarketers. recently, crammers have moved to the internet. some internet victims tell us they have done nothing more than submit their name, address, and their phone number in response to online offer is for either a prize drawing, coupons, or free recipes. eventually, they learned they had been crammed. they did not know they're buying anything and they did not know that by giving their phone number, there are authorizing a charge and their phone bill. they are understandably puzzled and angered when sometime later they noticed their phone bill contains a charge for a product or service that they did not seek out or authorized paying for and they never used. that is when some of the victims turned to my office for help. however, fcc data indicates that as few as one in 20 consumers
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that are billed for third-party charges are even aware of the building. my own investigation has revealed a similarly low level of consumer awareness. through our investigations, we learned that many victims have never visited the website of the vendor was product or service they are being charged for and wars, some of the victims don't have access to the internet. additionally, victims consistently tell us they have never use the product or service for which they were billed parrot that is not a surprise when consumers did not know the purchase anything in the first place. in one case that we handled, we managed to obtain the data on more than 3500 illinois consumers who had been billed
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for internet service and extended cell phone warranties. most of the consumers we talked to did not know they were being billed and non of the 3500 consumers had made a warranty claim or had use the internet service. our investigations consistently reveal the most fun crammers rely on deception. others engage in outright fraud. the basic marketing strategy has remained the same period weather over the phone or on the internet, the consumer is never clearly told that they are making a purchasing decision or they will be billed for the purchase on their phone bill. for that giving their phone number will authorize a charge on their landline phone bill. in contrast, or the victim participate in the transaction also unwittingly, the scams involving outright fraud do not require the victim to take any action. this cramming is free -- referred to as phantom of billing. the acceptance of the victims o of the deal is completely fraudulent. the voices of recordings are not the voices of consumers who were bill.
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i should note that in another of our cases, a county coroner's office, a restaurant, and the public library phone line were among the 9800 illinois businesses build for credit repair services that assuming the services were legitimate, could only be used by an individual. i would argue to this committee that when an automated children's dial a story from my the supposedly signed up for credit repair services, it is time to stop third-party billing. from the beginning, third-party charges on phone bills have been an open invitation to fraud and deceit. has been a scam or vendors, billing and irrigators, and carriers make significant money by consumers never noticing the charges. i strongly support the size of legislative action on the state and federal level to ban the practice altogether. a bank for the opportunity to testify today and i am happy to
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answer any questions you may have. >> thank you very much. now we turn to general berg. >> it is assistant attorney general byrd, but thank you for the promotion. i appreciate the opportunity to testify to the committee today. over the past year-and-a-half, our office has been issuing subpoenas to third-party billing alligators, to vendors. we have been interviewing consumers and we have reached a number of conclusions about the problem of cramming which i would like to share with you today. i would like to talk about a potential solution to the problem that has been embraced in vermont. first of all, the incidence of
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cramming in for not -- in vermont is extremely high for a 90% of the people responding to a survey had absolutely no recollection of ever having given consent to be billed on their local phone bill. secondly, the level of consumer awareness about the possibility that one can be billed for third-party charges on a local farm bill is extremely low. thirdly, we have found many instances of deception being used in marketing third-party charges that get passed onto local phone bill. and fourthly, and this is the major point, and it has to do with consumer expectations, ordinary people do not expect that third-party charges by companies that are not related to their local phone company can be placed on their local phone bills. they are simply not aware of
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that any more than people would expect or any of us would expect to have third-party charges placed on our monthly mortgage account statement for our electric bill. without that awareness, people will not play the detective. they will not scrutinize their phone bill to figure out if there is something on there that they should be complaining about. vermont has given the potential solution of disclosure a fair shake. for the past decade, there has been a statutory requirement in vermont that third-party vendors send a notice through the mail to people who will be billed on their local phone bills by the vendor. the fact is, that system has not worked. the level of awareness of the possibility of those charges have not increased in the state.
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in january, the attorney general's office proposed to the vermont legislation that a bill be introduced that would actually prohibit third-party charges of local phone bills. with some limited exceptions for things like direct dial services that are initiative by the consumer or collect calls for operator-assisted calls are companies rub -- regulated by public utilities. the proposal was otherwise to ban such charges. a bill was introduced to do that. it was approved by voice vote in both houses of our legislature. it was signed into law at the end of may and became effective immediately. under that law, a claim by a vendor that the consumers somehow consented to the charge is not a basis for allowing the charge. this is an actual prohibition.
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other forms of payment are allowed. vendors who want to charge people using a credit card or debit card or electronic funds transfer or a check, the kinds of them and mechanisms that people understand and expect, that is all permissible. you cannot do it on the phone bill. since may, there has been no negative feedback whatsoever about the bill. we think people are pretty happy with it. i would point out that the local phone companies supported us in that initiative in the legislature. we approached them last fall and made the pitch to them that these are their customers as well. they came on board. we were able to get that legislation through with that coalition and i would modestly suggest this may be a model for other states and the nation, thank you. >> thank you very much. now we turn to miss susan epley
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from georgia who has an experience you like to share with us about cramming. >> thank-you. thank you for having me here today. i am from decatur, georgia. i'm here to tell you about my personal experience with cramming. in early 2011, i work for a successful franchisee of 32 quick service restaurants as the accounts payable rep. this company offered incentives to managers and crew including bonuses paid to managers for hitting their number is based on profit and loss statements. in october, i was entering the at&t invoices and i got curious about how different the bills were from store to store. upon investigation, i noticed there were charges for services that were not from at&t. i called devin spoke with a customer service representative who recognize the problem and she explained that at&t was billing on behalf of a third-
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party company. she said it was the customer's responsibility to block phone bills from such charges. she told me she takes a lot of calls like mine. i contacted the third party company at the phone number provided and spoke to their customer service representative who said we requested the service. i then contacted the area manager for the store and he said he did not request the service. it went back and forth. until i insisted the charges were never requested because only area managers are authorized to make those requests. the representative offered to take three months of the charges off and credit the at&t bill for the next month. i insisted that all $1,900 the credited back. the representative said he could not do that and he had a record of the request for service. i asked to hear it. i was transferred to a supervisor who credited all the charges and i never heard a recording.
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for the next two months, i went through every single at&t bill for all our accounts, set up a block on each account to prevent future cramming and to my best estimates and, i spent about 15 hours dedicated to this issue alone. those hours to not include the time our accounting department area managers have spent on this. in the end, six of our 33 accounts were affected the estimates the total amount crammed on your phone bill was about $4,200 for it upon my persistence, that amount was credited back. even though aged on the third party company told me they had a recording proving we requested each service, they never played the recording for me. it is certainly is annoying and a hassle to deal with additional administrative paperwork making additional phone calls, and keeping information organized especially for services not requested. are busy accounting department had to deal with their own administrative issues such as readjusting profit and loss
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statements. the inconvenience and cost of administrative paperwork on this issue pales in comparison to what it has taken away from the managers of our restaurants. these managers work long hours in a busy and demanding environment with a smile on their faces and have a tremendous job juggling employee relations, customer satisfaction, serving safe food and controlling costs. great managers are rewarded with bonuses and some of our managers no matter how hard they work and no matter how much they earned, did not receive their bonuses because of cramming. it is infuriating to me that it is illegal for companies without authorization charge our businesses and in effect, take money out of the hands of hard working men and women. i worry about senior citizens who are falling victim to cramming because they don't have an accounts payable representative to check their phone bill for unauthorized
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charges. does my hope that our lawmakers will prevent businesses and individuals from being a victim to cramming by making it illegal for at&t and other companies to allow third-party billing, thank you. >> thank you very much i wish there were more consumers like you. you are a bulldog. but you have to be. >> thank you, sir. >> that is not complementary but i meant it to be. [laughter] our next witness is dave spofford who is the president of zyco and what you have to tell us? >> thank you for having me here today. i am the founder and ceo of zygo in manassas, virginia. thank you for investigating this important issue.
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i have a 20-year background in telecommunication billing and i have never seen cramming as bad as it is today. as we process tens of thousands of carrier invoices every month for our customers and are responsible for moving these third-party charges for many of our clients, we are interested in this subject matter cramming charges have been and remains a major problem for the industry. we manage approximately $1 billion per year in telecommunications expenses for more than 200 clients. we have software that helps companies of all sizes manage communication expenses and identify areas where they can cut costs. where a member of the telecommunications expense management association of which i have served as president. our clients spend $50,000 debt $10 million per month on a variety of telecommunications services. we monitor their invoices every month which allows us to identify trends, recurring
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problems, and the results of our joint effort to get control of expenses. we have the unique view into the view -- into the world of telecommunications services after reviewing three years, we found the following information that i hope will help the committee to investigate this problem. we have found 40,000 instances of cramming. the recurring amount for average cram is approximately $18 per month. we estimate that over 80% of all businesses experienced cram charges. 71% of our customers have experienced cram charges in the last three years. since the average charge is small and the time investment required to eliminate the charge is high, many customers simply pay the charge. we have identified several major third party billing consolidators who are responsible for the majority of these charges. we have also identified
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approximately 600 third-party bill names that are used to build nearly 3000 different line-item charges. biller rge quantity bu names may be a way to avoid automatic detection. these charges often have descriptions like voice mail, e- mail, director services, web hosting, and other names that appear to the normal services to the customer. as it turns out, more than 99% of these charges are not authorized by the customer and are for services they are not receiving. decentralized companies have more exposure than other companies for a large retail chains are particularly hard hit. the more invoices a business receives, the harder cramming is to detect. zygo has provided the committee
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staff with the details and a third party billers commonly used for these charges the communications industry is already complex and growing quickly and they stopped the practice of cramming would be a welcome relief to all communications customers. i thank you for your time and we are committed to supporting our efforts anyway we can and we look forward to working with you to put a stop to this problem. >> thank you very much. our final witness will be mr. walter mccormick, the president of united states telecom organization in washington. >> thank you. thank you for giving me the opportunity to testify today on behalf of the united states telecom association. i might add is a personal pleasure for me to be back before this committee but i had the honor of serving for many years as general counsel and as chief counsel to the minority. our industry accepted your invitation to appear here today
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for three reasons -- first, to a acknowledge the existence of a continuing problem, one that impacts consumers, one that has continued for many years despite remedial measures undertaken by our industry and by the federal communications commission. second, we appear to honor and cooperate in your effort to draw attention to cramming and eliminate it. third, we put our good faith dedication to work with you and the federal regulatory agencies to work for reforms. mr. chairman, our position simply put is that consumers should not be charged for services they did not purchase. for our industry, a third party billing had its genesis in a well intentioned pro consumer initiative by the federal government. in the wake of the at&t
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divestiture is, the fcc required telephone companies that had been part of the bell system to bill and collect charges on behalf of competing long- distance carriers and enhanced services providers. federal regulators believed that the convince of having all communications related services on a single bill was an important process competition, pro-consumer policy. although no longer required, third party billing continues to be valued by many legitimate businesses and by some consumers as a convenience. three into related measures form the foundation of the basic consumer protection from work in place today. they are the industry's anti- cramming best practices guidelines, the ftc driven billing order, and truth in advertising. telephone companies do four things to protect our consumers.
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the first level of protection seeks to prevent bachus from getting access to the telephone bill in the first place for it contractual commitments with billing aggregate is require active oversight of all service providers. the second level of protection seeks to make charges on a customer's bill clear and transparent. third-party charges are aggregated in a separate section of the bill along with notification that such charges may be contested without risking phone service. the third level of protection is to provide an instant credit to any customer then notified the company that a charge on their bill is not authorized. the policy of leading companies in the industry is to eliminate the charge, no questions asked. the goal of this first call approach is to provide the consumer with full relief without hassle including an offer to block further charges from that service provider and review prior bills to see a similar charges previously went
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on noticed and needed to be removed. many companies offer the customer the option of pace -- placing a block and all third party charges. the fourth level of protection involves monitoring and audits and suspension of service to problem providers. these measures, taken together can have dramatic results. one of our company reports have achieved an 89% reduction in chronic complaints since january, 2010. nevertheless, as this hearing in your investigation demonstrates, the problem of cramming persists. we close our testimony as we begin by acknowledging the existence of a continuing problem and by committing ourselves to working with you and the committee in addressing it. >> i thank you very much. that are twoint out t votes of the morning, i think
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are their two boats, have started. nobody panicked, we will be back. we will let amy klobuchar who has to go -- see? do you want to ask a question? we can have time for one or two questions and then we go vote and on the second vote, we vote immediately and come back. it should be no more than 15 minutes, can you live with that? all right. attorney general madigan, the word convenience was used by mr. mccormick. i am fond of that word because i am a student of oriental languages and zen buddhism. i am trying to figure out what convenience means because it is frequently used by telephone
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companies. you brought 30 lawsuits against companies. one of your recent cases you filed against a california company call i.d. lifeguards who charge more than 5000 of your illinois citizens $12.95 per month for a so-called identity protection service. when your office contacted these consumers, they said they never authorized to these charges and did not know the charges were on their phone bill. that is correct, is it not? >> that is correct. >> we found hundreds of companies like this. where does the word convenience -- telephone companies use this word when they say that will fix it themselves and use it now.
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how has this become a convenience? >> mr. chairman, the only people who would describe third-party charges being crammed on phone bills as a convenience might be the carriers for the aggravated or the vendors. it is not a convenience. it is an enormous and expensive passel for individuals and businesses and government agencies who are constantly having to be aware of the fact that they may be crammed and go for a very time-consuming process to have these charges removed. on like the testimony that mr. mccormick date, we found that when consumers have tried to remove these charges by contacting their care, they are given the runaround. they are told they cannot do anything about it that they will have to contact the vendor. then ms. epley went through the
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experience similar to what consumers have gone through. in terms of our case, there was a 56% refund rate. in other words, of the 5000 + consumers, 56 percent some of them had the bill -- had the charge removed from their bill. that is the outright fraud. they're supposed to be receiving a credit of the recovery -- of a credit report. no individuals have received a copy of their credit report. there is no convenience. it is a terrible inconvenience. that is the reality. >> i think you are right let me call it 15-minute recess and we will be right back. thank you.
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[no audio] [no audio]
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>> let me just finish out my question with you, attorney- general madigan. all we did was the eighth largest telephone companies. that was our search. imagine if we start going elsewhere. how much we would find. why do they do that? these are huge companies. they make some money from it, yet. ah. hopefully they'll get bad publicity from this. that is the promise and it broke that promise. if the ceo i had in my office yesterday whether he knew about it or not. i don't think he did. that is the big corporate structure and there is always
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the middle people. eventually everything is money and it is on an account or a report and company -- and companies are responsible for what they do. why do they do this? >> obviously, the response will be enlightening. we would not disagree with you from the perspective of what we have seen with consumers. there is an obvious financial opportunity for the carrier's because they are receiving a portion of those charges that ultimately end up on unsuspecting consumers phone bills. >> but not that much. >> not that much but this has been going on for 15 years. over that period time, it adds up. another thing you probably need to look at is the fact that land line service is a declining service. many people are now relying solely on their wireless carrier to provide them with their phone
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service. it may be looked at that this is a last opportunity to earn some money. i don't think that is the proper way to look at it from a business purpose -- perspective. that is all we can come up with in terms of why they allowed this to go on. consumers are absolutely furious. people are completely unaware of the fact that their phone number can be used as a credit card. i talked to my husband last night. the husband of the attorney general is not a lawyer and does not delve into this and i explained to him what we were talking about today and he said he had no idea that it could be done. if he doesn't realize that your phone number can be used essentially as a credit card, i would argue very few to nobody understands that in this country. >> i don't remember a previous
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example of when a telephone number becomes the same as a credit card. do you know such an instance? >> no, we don't know of any other instances. clearly, consumers don't realize this which is why the vast majority of them don't even find these unauthorized charges on their phone bill. >> here is one of the typical bills. this bill is five pages long. it has very small print. even with my reasonably corrective glasses, i have to really look hard to find the cram that is usbi. it doesn't say what they are doing. they have a telephone number. they have to pay $19.95. they have to do it every month.
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then there is more stuff. who goes through this? you do because you are an american heroine and the accountant, ms. epley. there is more. >> almost nobody goes through this. >> isn't the point that they should not have to go through this? there should not be the doubt and suspicion. these huge companies make hundreds of millions of dollars. mr. mccormick, how do you answer? you promised you would take care of the problem on a voluntary basis. in such strong language that we, unfortunately for us, to our embarrassment, accepted that. now we are in the mess we are in and nothing has changed. why do companies do this? >> mr. chairman, i am aware of
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the commitment that was made in the late 1990's. as i began my testimony today, we agree that this is a continuing problem and that the need to be addressed and we want to work with you on it. >> that is not the question i asked. i am aware of the problem. , that's what you said 10 years ago and stronger language. i said why do they do it? what is the company as large as at&t and many other people on that list that do this? they get this money. why did they do it? i don't understand. it is bad publicity. it is scant. ming.
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it cannot be very good for a telephone company to have that reputation. >> i can share with you what my companies have told me when i asked that very question which is that the system began with a federal requirement that it was coupled with state requirements in various states around the country that it is even unclear today whether or not the industry has the ability in every state to launder engage in this business and i believe the staff report that you released this morning indicates that there is some uncertainty in that area. >> let's say there is some uncertainty -- why would the telephone company take the chance? that does not seem to be a lot of question that it is illegal or wrong. it is scamming. why would they take that chance?
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bell make that much money from it. >> correct. >> why, why haven't you clean up your act? one of the just say stop it. -- why don't they say stop it? >> i don't know the answer to that question other than to reinforce what i mentioned a moment ago about the fact that it began. as a began. as a federal requirement. the industry has taken significant steps. even the report issued today indicates there has been improvements but it remains a very significant and pervasive problem. the challenge is that once you identify a scammer, they quickly come back and another disguise. it is a very significant challenge. >> all right.
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>> thank you very much. i want to follow up with attorney-general madigan. can you help me in terms of what are the current laws and penalties in place to address craming? what is it that has been difficult in addressing this through a prosecution route? i think about when somebody steals from a convenience corps, we generally shut down this -- we go after the thief. when you ban all third parties, what are the difficulties? >> we want to ban third-party charges on phone bills because we have yet to see anything legitimate in terms of the products or services.
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people are obviously aware. it should not be the responsibility of law enforcement to play whack-a-mole with these organizations. there might be a law enforcement action that ultimately results and that vendor being kicked off the pillars billing platform but they reappear with another name engage in the same activity. there is an entity we filed a lawsuit against twice because we got rid of them once and they reappeared doing almost exactly the same thing. it is on reasonable, i would argue, that requires state level law enforcement or federal level law enforcement to constantly go after something that is clearly deception and fraud. we use our consumer protection act to go after the vendors. again, when the end up going after them, these are the people
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who had the wherewithal to eventually contact the attorney general's office for the vast majority of people if they ever become aware of these charges will call their carrier. very few of them make it to us. at the end of the day, you have to say that if we are getting five complaints about one company, by the time we start the investigation, they have moved on. they know they are engaged in fraud and they know that if there is a significantly higher refund rate, there's a chance they will be thrown off the billing platform. they are clever in the sense they are constantly reconstituting and changing their name or the type of service they are providing and hiding under different lines. this is a serious situation that is costing individuals and businesses and government agencies a significant amount of money every single year. >> as a follow-up, on the
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federal and, you said you have been working with the ftc? >> they had workshops and have been engaged in this over the years. >> they are able to pursue these grammars under federal law? >> i don't know the details of their lawsuits but i know they have had significant action. >> one of the issues we would be interested in looking at is making sure that the tools of law enforcement and -- that they have the tools they need to go after the bad actors. i want to follow up with mr. byrd. he said vermont had a notice statute in place that was ineffective? how did that wework? why did it fail?
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>> i think the notice requirement failed because of the extremely low level of understanding in the public about how local phone bills can be used as a way of charging people for unrelated goods and services. you will not open the letter that comes from the vendor that looks like a piece of junk mail because why would you? you would not scrutinize your phone bill because it is your phone bill. you are being charged for your phone service. isn't that correct? it is not correct because there may be something on their that is often not related to your phone bill. we have been working for decades to get people to scrutinize their credit card account statements. you can be charged for lots of unrelated things. that has even been difficult thom the data pa
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discussions. the phone bill is such a normal payment pathway for normal goods and services that people are not looking there. this is one of the reasons why you have a huge disparity between the number of complaints are filed and the number of victims that you have. to have that complaint base as a prerequisite to good law enforcement action, we find barry few complaints and a huge number of victims. it is not surprising. >> when these notices were sent, assuming there are many bad actors participating, i assume under prior law, they would have to send these notices to the consumer? i'm not clear on that theme yes, >> did they even sound of the notices? -- send the notices? >> there were many vendors who
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have a veneer of legitimacy who will respond to subpoenas we send out and they will say that we got consent from everybody recharged. in fact, there is no way of determining that. it is an online sign up, there is no way of telling whether the data that was used to charge somebody on their phone bill came from the consumer or came from a data file that was obtained in some other way without any involvement of the consumer. the prior law require these vendors to send a freestanding notice through the mail to consumers. many of the vendors said that they did not send a letter through the mill but we have a clear notice on our website. when the consumer signed up, the consumer knew that he or she would be billed on the local phone bill. there is no way of telling if the consumer side up. when we did our survey and this was not coupled with any promise of refunds or anything, people
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in our state tend to be pretty straightforward and they respond to this kind of inquiry, we had a vast majority of people saying that they don't know what we were talking about. they did not give consent and should not have been billed. >> thank you. i want to follow-up with you mr. mccormick. you had said in your testimony with respect to third party billing that was valuable to some businesses and consumers. can you provide us further information of how it is valuable? if we were to ban the practice, what are your concerns about the consequences? general madigan said she did see legitimate charges. what is your perspective on any value to the consumer? >> [inaudible] we would absolutely agree that
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it is not convenient to have unauthorized charge put in your telephone bill. in the case of vermont, mr. byrd testified that although vermont moved to third party billing, even their there were certain exceptions. it was believed to be convenient for the consumer to be able to have certain services aggregated on a single bill. any kind of examination in this area i think would require some broad understanding of what legitimate businesses rely on this third party billing as a competitive opportunity and a consumer convenience. we try to provide you with more information for the record that i would appreciate that. i think it's important for us to understand that if there is some legitimate purpose, what that would be and what examples are, given the experience we have heard from general madigan,
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thank you. >> centre mccaskill. >> thank you all for being here today. i would like to place on the record a letter that the committee received from a company that is based in my state, o'reilly four parts. it is quay tail. for 10 years, they realized that they were being victimized by extensive cramming, they began hiring people full-time to do nothing but monitor their bill. they now have three full-time employees that do nothing but monitor billing. the experiences they have had with at&t and others, frankly, are outrageous. , how difficult it has been for them to curb this practice for the estimate that for 10 years, over $200,000 of billings have been attempted against their company.
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they acquired another company just a few years ago and they have done the work on that company. they think they have lost $300,000. $550,000 worth of cramming overeaten this year. and they are particularly victimized because they open new stores all over -- all the time and the number is available to the public. the small businesses and their new number is is where these companies are feasting brought in on small businesses. they have spent $400,000 on their staff to do this over 10 years. they have only netted $150,000. most companies don't do this. most companies try to beat it out if they can and try to do their best. i know you are in an awkward position, mr. mccormick. my wrath will probably directed -- will probably directed to you
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and we know each other by don't need to pick on you but how much are the phone companies making on this. they are allowing these people .o use their platform to bill how much did at&t make on cramming? >> i have been told that the rebbe is related to a third party billing are about 1/10 of 1% of overall industry revenues. >> that does not tell me how much it was. >> i would have to provide you with the exact figure for the record but i believe that the at&t revenues from third-party billing amount to about $50 million per year. >> to the total industry is making $50 million per year? >> that would be at&t. >> that sounds like real money to me. >> $50 million for third party
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billing, i am not saying that they make that much off of cramming. the make $50 million in fees off a building -- third-party billing service. for the industry, it is somewhat less than an estimated $200 million and over all, that would represent about 1/10 of 1% of industry revenues. >> it sounds like that either you will take a minimal position and a good reputation of these companies are being maligned to a point where they would consider it inappropriate or it is significant money and they are willing to bear the burden of this bad practice because ultimately it is the consumers out there fighting for their life and every dollar that they see on their own bill. when my credit card is used, there are a lot of hoops i am expected to jump through to use my credit card online.
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i have to have the right billing address and they have the ability to match up whether the billing address is correct is pin number on my credit card that i have to use that tells the company that i actually have the credit card in my possession. why don't the phone companies require these third billers to get this kind of identification? >> the companies have contracts with the third-party aggregate is that require the aggregate not only to authenticate to the provider but require that the service provider provides authentication of the actual authorization of the charge. those contractual commitments are in place. the telephone companies actually bought it those third-party aggregators. this remains a very significant problems. the report found that it is very
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difficult to tell what are and are not authorized charges. >> the company that wants to bill you, they could get a self- identifying number and there is nothing there for that. if somebody calls my house and my grandchild answers the phone and they ask if you want to spend $2 per month to get tv listings in your area delivered to your internet account or whatever and my grandson hangs up the phone, they could start doing that because they can say they have called and somehow they got authorized. some of them don't bother to call. why don't these telephone companies say you have to produce from the person authorization for these services that have to produce pin #that matches? >> that may be a good idea.
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it is my understanding that the way in which they require authentication today is through three of specific methods. one is through actual recording of the individual when they are called and they authorized the service. number two, it is on the internet through double click but that's and number three, the delivery of welcome packages that are then accepted. they do now youpin numbers but they have industry standards with regard to authentication. >> two of those three are very easy to do fraudulently. the o'reilly folks told me they heard the recordings and they they think they are as legitimate as the rhetoric flying around the capitol right now. i don't think the recordings are even pull through. it seems this would be a simple way.
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when you got a phone line, you pin number and before some of the charges, they would have to be able to produce that number. i'm not giving my number out on anything unless it is something i want. it seems like that would clean it up pretty quickly. you could do that on your own without the government getting involved. would you mind taking that your association? >> i absolutely will. >> that's great. how many third-party vendors have been disqualified -- this will be my last question -- how many third-party vendors are you aware have at&t disqualified from using their customers'
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phone numbers? >> i don't have a specific number. >> i would like to know how many total third-party vendors at&t has a contract with. they are the biggest and have the most resources to shut this kind of step down. according to o'reilly, they have been very difficult. there are some parts of a country that cannot block. i would like to find out from at&t how many third-party vendors they have total and how many they have disqualified annually for the past five years. thank you very much. >> thank you, senator. >> i will defend -- i will defer to senator udall. >> are you sure? >> go ahead. >> thank you very much. once again, you are steering us and the right direction in terms of consumer protection and focusing on this hearing. i very much appreciate that and i appreciate the fact that you
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have an attorney general, an assistant attorney general here. senatoryotte was very aggressive in her state and the both of you are very aggressive in terms of stopping this kind of scams and we appreciate your presence because you bring a very important perspective. i understand from your testimony that almost all consumers who were crammed were unaware of the charges and did not want or use the advertising services. i think both recommend the prohibition of third-party charges to landline phone starts. when we get the innovation and new uses and we have the cell phones going, we will next be looking at cell phone and what is happening there.
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do you have any recommendations on how to prevent a problem of this scale, $2 billion or more, what can we do as far as cell phones affecting third party billing? what is your recommendation? me give you a perspective on the overall complaints. it appears that about 82% of the complaints were regarding land lines and 60% of them were wireless lies. in the state of illinois, we have seen very few complaints regarding wireless lines. our belief is that wireless carriers are much more vigilant and intolerance of third-party billing. they have been very aggressive in ensuring those bills are claimed and they maintain their good reputation for.
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again, i would propose that if you ban that opportunity, he will prevent that fraud from migrating from landline bills to the wireless bills. many people are starting to rely exclusively on wireless service as opposed to land line service. your concern is a good one but i would tell you that we have not seen the problem at the level it exists on land lines. it's certainly as the opportunity if we don't cut it off entirely. >> do you have the thoughtsm,r. byrd. >> i think it is important to look at the issue of consumer expectations and whether you can be billed and for what and to see if those expectations are the same in the wireless environment as and a land line environment. it may be that because of the availability of various related services and those kind of
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thing that in the bill to wireless account that people will expect that to be billed but an outright prohibition may not be the right way to go. you could have a blocking system that could be automatically open a wireless account. you could opt out of that which would protect the broad public and those people who want to be billed for a whole range of things on their cell phone account, they can do that. >> two and the other panelists have thoughts on this issue? -- do any other panelists have thoughts on this issue related to wireless? >> our company as a service out now which allows people to upload a fumble and detect third-party charges and we are seeing an increase on the wireless site for it is nowhere near as bad a problem yet. due to the legitimacy of many third party charges on wireless build app,s, movies, songs, for
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smart devices, it will be a tough challenge to determine what is legitimate and not. we do that based on actual heart research of every line item charged so we can catalog the bad ones and inform our customers about it. the broad prohibition would be difficult but it is coming and it will get much worse on wireless. i don't think any legislation on the wireless side will affect wireless. >> thank you. i would also ask consent to put my opening statement into the record. >> absolutely. >> thank you. >> i don't really have any questions. i appreciate you holding the hearing and the ranking member being here and participating. this is a problem that i think will continue to grow and it is
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not just this area. my daughter was telling me the other day -- she had somebody called and asked if she would like to increase your sales and visibility throughout the country and she said yes. they took the yes and use that as a justification to add about $100 per month. it was very substantial. there are all of these areas. wireless is important. in arkansas, where 70% wireless at this point. you see that especially with young people. it does all go together. i think it is really important that we discussed this. we've got a lot of differences of opinion from the panel. the panel is excellent and we
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appreciate you being here and sharing your insights. all of you being on the front lines are fighting the battle in your own way. law enforcement does not want to see this happen. the phone companies don't want to see it happen also but the key is how you do it. in a reasonable way. thank you again, mr. chairman. >> thank you, senator. we have to wind up -- it is interesting to me that at&t itself has been crammed. some 80 times my question to you, mr. mccormick, i think there is total agreement on this panel except for you and you are off-- if at&te ofit
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itself as being crowned 80 times, they probably don't know about it. on the other hand, how can they not know about it because they have good auditors and bean counters. simple't we just take a thing and put all of our agony at an end and try to protect authorized charges but get rid of all the rest? why would we not do that? it is millions of sleepless hours for millions su ofsan why go through all the tomfoolery of hedging bets. ? this should be a monumental embarrassment to the telephone companies.
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we will persist on this. because that is what we do here. we protect consumers. we disband that so you would not compromise yourself so much as a witness? >> mr. chairman, as you know, the industry supported the legislation. the business of third-party billing represents less than 110 -- 1/10 of 1% sun. >> i don't care. you have said that. do you know how misleading that is tha? it affects hundreds of thousands of citizens across the united states every single year. don't give me that represents a 1/10 of 1%. that is the corporate view. why do you use it?
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what to think about her instead of the 1/10 of 1% which i don't necessarily agree with. why not ban the on authorized building? give america a reason to wake up with a smile. don't embarrass the phone companies and all the others that we will investigate. why not? >> mr. chairman, we to ban all authorized billing. with regards to billing all third-party billing, that is something i will explore with the industry to see if the industry would like to support that. >> alright, i will turn to send ayotte to ask a final question that i will have a closing statement. >> thank you, mr. chairman. this is a follow-up. i appreciate mr. mccormick, that
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you will speak with the industry and i look forward to your supplement to the question that i * a week and have a full understanding if we were to go in that policy direction and what would be the full consequences of doing so for consumers as well as businesses. i appreciate that. attorney general madigan, as i understand it, illinois passed a craming lot in 2009.. which does not have a complete ban on third-party billing. can you help us understand -- you are asking us to do a complete ban -- what has not worked in your law and what has brought you to this position today? >> when we brought our lawsuits, all three of them, we used our consumer fraud act. we have yet to use the new law.
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the reason we're here today is we would be -- we would like to be more like vermont because they have been successful in being able to pass an outright ban. that says that we have to spend countless hours in a slightly similar way to what aep ms.ley does. we taken hundreds of complaints, filed a lawsuit in the -- eventually after a lawsuit -- after an investigation and get restitution for the consumers but not nearly all of them. what we have seen repeatedly and what you have heard everyone testified to today is that consumers don't know that their phone bill can be is like a credit card account. consumers and that would services and products crammed on their phone bills that they did not ask for an because they never ask for them, they never knew they were paying for them, and they never used them. the way to eliminate that without having to go through the heroic efforts of most people on this panel is to simply ban
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these third-party charges. yes, there are some exceptions operator-assistance, dial around services, there are certain things that everybody knows what those exceptions are. those are things that individual consumers or businesses affirmatively asked to be put on their bill. this is not some secret mystery that ends up crammed onto their bill and all they have done is put their name, address, and telephone number into an online solicitation to get coupons. that seems to be the way that many people on the internet end up being charged for these things. , if they were on the internet at all. because of the enormous level of fraud and deception that is the entire industry here, it should just be banned outright. >> one final follow-up -- mr. mccormick, if you have it as an industry have to follow a bunch
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of different state laws in this area of -- you have to follow the law that illinois passed, i assume this is what you are dealing with. if we are looking at a solution here, whatever our solution would be that this committee comes up with, what is the industry view in terms of having a -- one federal standard whether it is banning third party billing or some other solution? what is your perspective on that? >> this is primarily a national business. these issues have come up. we have been looking to thefcc as the principal regulatory agency. it is good to have a single nationwide standard.
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[no audio] >> i have to ask the attorney general's here if you have any concerns about prevention? >> we always have concerns that the state level. there was somebody who kindly mentioned the fact that you would want to make sure that while the federal regulators had authority to do whatever they needed to do against cramming that the states are not stripped of that authority. we find that is not often strong enough to contend with the on- the-ground problems we have in the state. >> thank you. . but we closed with a couple of things -- 1, thank you, very much for being here and what is an american problem, a classic
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american problem. we're not talking about the war and afghanistan, or raising the debt ceiling. i grant that, but we are talking about something that is profoundly troubling and disturbing. for millions of americans, it is also a necessary. i mean, i thought what we were meant to do is try to clear up problems here. 10 years ago, the telephone industry said they will clear up the problems because they make us look bad if we do not, therefore you could trust us to do it, and they did not. all i am saying is we are going to stick with this. the sec stated yesterday that they are seeking comment on whether a band third party billing -- banned third-party
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billing -- they have settlements, the ftc, but that this stuff that is already done, and that is an admission of guilt. i am not a lawyer, but that is the way i read it. anyway, in the near future, i plan to introduce, working with colleagues from both sides of the aisle, legislation that will put a side -- stop to this because i simply cannot find any grain of sense in us having to have a hearing like this. and and, to have -- and to have all of you, you have not gone off of the -- gotten out of the -- all of the spotlight, but susan is better looking than you. >> no argument. >> why put people through that? it does not make any sense. it will not change the future of the nation, but it will change
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to a whole lot of household functioning and ability to survive in truly horrible economic times. those times would be with us for quite some time would be my guest. i do not think we should mess around with this. let's not worry about whether something is convenient for not. let's say if there are certain authorize things that should be done, let's work on that and figure that out, then take the rest, and just ban it. so, with that neutral statement, this hearing is adjourned. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute]
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>> today on c-span, the national governors' association 2011 annual meeting with remarks from the governor of arizona, and martin o'malley of maryland and remember in 9/11 and border security. -- remembering 9/11, and border security. >> next week is the one-year anniversary of president obama signing the dodd-frank act into law. on monday, a meeting with the oversight tonsil. the council's mandate is to
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identify and manage risk that threaten its financial stability. you can watch live monday, at 11:30 a.m. eastern, on c-span to. >> you are watching c-span, bringing new politics and public affairs. every morning, it is "washington journal" connecting you with politicians and newsmakers. weeknights, policy forms. on the weekends, you can see our signature programs and sundays, "prime minister's questions. all it can also watch our programming and a time that c- span doubt or -- at c-span.org. washington, you're white, a public service created by america's cable companies. -- your way, a public service created by america's cable
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company. >> next, an afl-cio forum on monday. he is it -- you will hear al franken, joined by sander levin, and richard trumka. this is a little over two hours. >> welcome to our forum. thank you to our sponsors. i am bob herbert. sometimes i wonder what universe the policy-makers in washington are traveling in. we have a full-blown and plummet crisis in this country that is not a sense you would get if you followed -- a full-blown in
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employment crisis in this country, but that is not the sense you would get. i am from -- back from ohio, where i've been talking with people who have been out of work, and whose families have been struggling, this in mortgage payments, deadlines, and meals. one man was out of work for a year, married, and the father of a five-year-old, and he told me what it was like last christmas, when the family put up a christmas tree, but had no presence to put under it. it sounded like a figure from one of those old, depression-era hollywood movies. even though we were not able to give each other gifts and everything, we still had each other, he said. we still have a roof over our head. americans are learning in this hideous economic environment to be thankful for small favors. there was a time when this man was so far behind in his bills that he would go to downtown
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columbus as often as he could to donate blood, just so he could collect the $50 they gave to donors. i thought of that as additional income he said, and we needed it. all over america, people once thought they were solidly in the middle class are facing an economic abyss. poverty is one of our few true growth sectors, but the poor are not even talked about now any more. there must be close to 50 million, but you hear almost nothing about them from our politicians in the mainstream media. or are invisible. the poor and the middle class are competing for the same jobs. when mcdonald's announced they would open new jobs, more than 1 million people applied. on friday, we had another
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horrendous jobs report, with over 14 million americans officially counted as unemployed, which created just 18,000 jobs in june, and very few of them were good jobs the jobless rate rose only to 9.2% because the number of people counted in june declined by a quarter of 1 million, not -- yet another bad sign. the reality is much worse than official statistics. young people in our society are in danger of becoming a lost generation as far as economic well-being is concerned. for perhaps the first time ever in the united states, they will likely earn less and experience a lower standard of living than their parents' generation. college graduates are increasingly working at jobs that do not require a college degree, thus pushing people with just a high-school diploma or less, into thule begin to
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truly real war, are out of the work falls entirely men and women 50 and older are facing the -- out of work entirely. men and women 50 and older are facing the reality that they can not work any longer. paid vacations, fringes, they're going the way of the typewriter and the carbon printer. the need for urgent action could not be more clear. whether they doing here, in washington's alternate universe? are they trying to do all they can to create millions of new jobs? are they in a desperate rush to reinvigorate this faltering economy? now. they are engaged in a mind- battle over dueling
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agendas. pick your poison -- the president's misguided let's return the social contract approach, or let's make the rich even richer subaerial favored by the republicans. both plants will -- both plans will further weaken an economy that is already on life support. until recently, vice president joe biden put the top economic advisor road "washington needs to quickly aggressively shift from its long-term debt obsession to the much more immediate job problem. to do otherwise, would be deeply irresponsible. ca -- irresponsible. i do not think anybody is listening.
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maybe they understand that only too well. if there is one thing i hope we emphasized during our program today is that you do not put out a conflagration by spraying it with the accelerant that started the fire. we are here to take a more constructive approach, so let's get started. i will introduce our panelists. [applause] >> i am delighted that congressman sander levin, an old friend of the afl-cio, and a champion of working families could be with us. he got his start as a labor lawyer in detroit, and though he served in the house for more than 30 years, he has never abandon the fight for working people in the united states or abroad.
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he is a past chairman of the ways and means committee, and now it's ranking democrat. welcome, congressman. [applause] >> we are fortunate also to have with us heather boushey, senior economist at the center for american progress, where she works mostly on labor market issues, especially the stunning impact of the great recession on workers and their families. heather has worked as an economist at the joint economic committee of the u.s. congress, and the economic policy institute. she has always been a powerful and articulate voice for progress of economic policy, and we welcome her here today. [applause] >> richard trumka is here. some of you may have heard of him. he is, of course, the president of the afl-cio, and one of those rare individuals who really knows the ways of washington,
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but also understands from long, personal experience, the real lives of real working people in the real world. he came out of the coal fields of pennsylvania and one on to become a lawyer and true policy expert. he carries the concerns of working people with him wherever he goes, and that includes to the white house, where he serves as a member of the president's jobs council. we are thrilled to have him here today. welcome, rich. [applause] >> speaking of the real world, we also have a couple of workers that will be telling us firsthand what it is like to be out there. i spent a little time with both of them while i was in ohio, where i also got to spend time canvassing with working america, whose folks are going door-to- door, and asking people about their experiences. the first thing? -- amazes me about working
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america is that anybody talks to them. i did not know what their secret is. people to talk to them, and you would be amazed at the percentage of people who are really struggling, that are either out of work, or having trouble making ends meet, or their kids are having trouble finding a job and cannot pay off their college loans. it was a real eye-opener. i appreciate the help they gave to me. so, anyway, the couple of workers that we have with us here -- one is shonda sneed, who was from young's field, ohio, and two weeks before christmas in 2009, she and several co- workers were laid off from the company in dayton that designed heating, ventilation, and air conditioning units. she is still on unplowed, and is set to lose her insurance next
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month. because of her kuatz, she might lose her health-care aide who provides assistance to her mom who is suffering from dementia. some-kneed, thank you for coming out here. welcome -- shonda sneed, thank you for coming out here. i know it was not easy. welcome. [applause] >> i am delighted that bob stein is on our panel. he is a father of three that lost his job last year. after working more than 20 years year in sales, and another six as a custodian, bob was fired and and replace with the cleaning service. he will tell us a little bit about his hunt for a new job, which has not been easy.
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welcome, bob, and see what. [applause] -- thank you. [applause] >> the empty chair down there is not because anybody feared showing up to debate as today. al franken fears nobody. he will be here later, and he will wrap things up for us. senator al franken grew up in st. louis park, minn., and spent 37 years as a comedy writer, author, and radio talk-show host. i wish he was elected reps and will retain about the shenanigans' he has seen since he, -- since he came to washington. let's get busy. we will do some work here. since we are talking about the real world, bob, why don't i start with you? exactly how long have you been looking for a job this last
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time, and give a sense of what that has been like? >> i have been unemployed since may of 2010. my background is primarily in sales, and i think that is where my skills said is best, so i have tried to find a job in sales since that time. as you are all aware, i'm sure, when you apply for a job that will pay you a living wage, and i am not asking for anything o 70bitant, there are 60 tw applicants for each job, and it is difficult because there might be people that are better qualified, or have college degrees or beyond. you do the best you can to make a good impression and answer the questions properly, putting together a good resume that is very professional, and it is frustrating because almost all of your job applications are down over the internet, through
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various web sites, and from what i understand it is very easy to turn people down. if i have been told they go through these resumes mechanically. a real person does not even look at them. it is hard when you know you are a hard worker with a good skill set, have the right work ethic, and can not find a job. >> you had mentioned what it was like going to job fairs. he said it was depressed. >> you get the feeling that they are there more for advertising and finding good in place. they will list all the people that will be here, and when you go, you will find the most of the jobs are very low-paying, where they seem like they're not really looking for someone. you can get that feeling when you are talking to someone, whether they are really engaging you, and try to find out what you have to offer, rather than
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handing you some information or a brochure that says we would like you to apply. >> shonda sneed, how long have you been out of work, and what is your job search than like? >> i have been out of work since december, 2009. i'm sorry. december, 2009. it has been hectic. when you came out, to search for a jobs, i was employed 10 years of my less physician, and it was not the same. -- at my last position, and it was not the same. you have to go on the internet, submitting resident over resume after resume -- resume after resume. i've gone to job fairs. the last job interview i was told that 450 people were
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applying for one position. i'm still upbeat that maybe i will be that one. you call back, and you say can i contact you, ken i said more references, and they say please, do not contact me. that is basically what it is. i can talk my way into a job. all i want is a fair share. i want a decent job, a safe environment. i have worked for 20 years. six months after leaving high school i got a job in the engineering field, and until 2009 -- is not like i do not want to work at i love work. >> what are you going to do when your unemployment checks ron paul? >> honestly, i do not let -- run out? >> honestly, i did not live in
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the here and now, i have been banking for the last year. i did not know what i'm going to depend i have a mother that i have to take care of. i have a home that i have to pay off. i thought i was living a dream, go to work, get a job, take care of your family, and you will be ok. it is not like that anymore. i want the american dream. i guess i am going to have to get four or five jobs to make what i was making before, but then who will take care of my mom? >> congressman sander levin, and millions of americans are going under in this vast sea of unemployment, and there does not seem to be this sense of urgency required here in washington on capitol hill, or at the white house. can you explain that? do you agree with that, and if so, why is that the case?
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>> in a way, it is difficult to follow bob or shonda sneed, is it not? i do not think anybody can tell the story quite like you do. i think the problem is, as you said, you used the word "urgency." there is not a sense of urgency about the unemployed in this country. i just want to go over a few facts and figures to kind of illustrate how the two of you really represent millions of people. 14 million -- over six have been unemployed for over 26 weeks. it is historically the highest number on record. what is happening is that this program is going to expire at
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the end of the year for most people. the emergency fund ends. those that are unwind tear can continue. there are -- on one teir, can continue, there are four, but after that, you are out in the cold. as for the state program, the provisions that we have put in place at the end of december go out of existence, and they help the states because there was 100% funding, and we changed the time for a look back from two to three years. that goes away. essentially, you have millions of people who are facing what you are facing. i come from michigan. i want to be very blunt to show
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you the lack of urgency, the lack of sense of community. if this is the state of michigan? recently, they changed the basic state program from 26, to 20 weeks. >> what would it take to develop a sense of urgency among elected officials? what do your colleagues say behind the scenes, when you are just having random discussions about the unemployment situation? >> to show you how difficult this is, i am on ways and means, and the majority of republicans passed a bill out of committee that would have given the $30 billion that was there in the federal program to the states to do what they wanted to in terms of unemployment. they can either provide the benefits, or lower taxes on
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employers and give the unemployed nothing. so, you asked me what is going to take -- there was an article yesterday about the invisible unemployed. one of the problems is that now the unemployed receive checks through the mail, or through their cards. for 20 years ago i went with a reporter, and we went to an office in madison heights. he interviewed people, and they were in line, and he was able to see -- this was 20 years ago -- that these were a very diverse group, and he wrote the stories. they were on the front page of the newspaper. i would just ask reporters, if i might say so, needy people, to do what you did the media
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people, to do what you did -- media people, to do what you did. he mentioned the unemployment. -- you mentioned the unemployed. there is also age discrimination. applications come in in these huge numbers, and ages indicated on the application. so, when you get two hundred or 300 applicants for one job, it is very easy not too clearly obey the law, right? you just take the younger ones. so, what do we do? i think what we have to do is do what you are doing here today, all of us. we have to somehow elevated the issue. when we raised our voices once the bill committee came out of
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ways and means, and we challenge them to bring it to the floor, they did not do that. we spoke up. we said to them dare put that on the floor, dare let people vote to take $30 billion away from the unemployed and give it to the states, to lower taxes. >> one more question, just to sort of hammer home the idea of how serious the situation is -- so, this is as we all know the worst employment crisis since the great depression. give us a sense of how it is effecting your workers, and what you are hearing when you go around the country talking to members of the afl-cio. >> let me also introduce our executive vice president.
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thank you for being here. i think it goes from mild anchor to hostility and a lot of places. workers have been out of work. when their first laid off, they have high expectations about getting a job very quickly. that hope slowly fades, and as it fades, it turns to anchor. they turn around and say who was actually working for us? in some areas you have over 20% unemployment. manufacturing has been hit very, very hard. our members are getting not only laid off, but they are having benefits taken away from them. if you look at the fights that we have seen throughout the states, the republican governors used budget deficit fights as an excuse to try to take away collective bargaining, and the means for most people to be able to climb the economic ladder. so, there is anger.
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that. actually, it caught fire. we have been trying to have a debate about collective bargaining for a couple of decades, and we were unsuccessful in doing it. scott walker handed to us. we were having that debate, and 77% of the american people believe that workers, whether they are public or private should have the ability to increase themselves economically. there is anger and is going to be difficult to motivate our members. there is a lot of frustration with both parties. there is no comparison when it comes to democrats and republicans about who stands with workers and who stands with the rich. there is frustration that more is not being done. the time for excuses is about over. people do not care why it is not being done. they only care it is not being
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done. i happen to agree with them. this is about priorities. this is about wanting to do something. we can create jobs if we choose to do it. so far, as a nation, we have not chosen to do it. it is regrettable. we have created a generation of workers that will never recover for what -- recover what they have lost during this. bank of time. there is a big -- during this periiod of this-- period of time. period of time. >> can you outline the differences we can expect if
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different politicians were willing to do something like that? or the budget cutting they are talking about so much? >> thank you, bob. i want to start with where rich left off. the unemployment we have and on the bus is something that policymakers can do something about. as the economist on the panel, i want to leave the audience with one thing. what we do that is good for workers in the economy will be good for the economy overall. that is the way the deficit conversations are going. it is as though there is this big difference. we have to deal with the deficit because it will be good for the economy and dealing with unemployment is not. they could not be more wrong. until we get america back to
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work, we will not be able to get our fiscal house in order. your question about the difference between investing in the economy and addressing budget problems is a false choice. for starters, we are in this situation today because of the collapse of the housing bubble and the ensuing financial crisis and all of the acronyms we have learned so much about over the last few years. the collapse of the housing bubble left a big gap in our economy. many of you in this room know that the middle class has been squeezed for decades. they dealt with that squeezed by taking on more debt. that debt was made for possible by deregulation. as middle class families that squeeze and they took on that debt, we have a big gap in our
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economy. they do not have as much home equity loans and as many jobs. until we fill that gap with investment in education or infrastructure -- i do not care what you and best in -- we are not going to be able to get back to full employment. until we get back to full employment, we cannot deal with the budget challenges. as bob and shonda know, when you are out of work, you do not pay as much in taxes. that is a big key to what is going on with our budget now. until we get that back on track, focusing on the deficit will only further push our economy in the wrong direction. my biggest fear writedowns is back if things work out in the
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way that it seems to be every morning when i get up and read the paper and get really mad over the breakfast table -- if things keep going that way and we do not invest more money in unemployment insurance and we have a deal to address the deficit crisis that cuts spending too quickly, that is only going to raise unemployment. it will only lead to a worsening of our situation. we are on a downward spiral. it is thanks to the leadership of people like congressman levin and senator franken that will hopefully lead people to the idea that we need to go in that direction. >> there is a program called build american bonds. over $100 billion in bonds have been used. it is infrastructure.
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somebody got up on the floor of the house and said the problem with the program is that the money goes to the states and local governments. yes, that is where construction money goes. they want us to bid out all of the contracts from washington? they refused to renew it. it went out of business. at least 25% of the construction workers in southeast michigan are out of work. it is probably closer to 35% and 40%. that has not happened since the depression. another example -- in frazier, michigan, we went to a training program. the money came through a federal program to the states revolving -- states, the balding funds for
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water programs. it put people back to work. it was a nonpartisan group. there were republicans and democrats who were saying, what a wonderful program. we could not have done it without the federal government. i stood there and i said, tell that to washington. tell that to some of the people in your own parties. those are two examples of the needy. now they are talking about bringing up a highway -- those are two examples of the need. now they are talking about bringing up a highway bill. if we do not have growth, we will not solve the unemployment problem. it has to have that ingredient. >> rich, i will double back to you.
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you have all of these manufacturing workers jobless at the moment. if i understand correctly, there is a $2 trillion deficit in terms of our infrastructure needs. this seems like a slam dunk. it does not seem like a slam dunk to policy makers. talk about what we could be doing in terms of infrastructure and what your members are ready, willing, and totally able to participate in. >> the infrastructure deficit is for old and infrastructure. that is according to the society for american engineers. it is $2.20 trillion. we have another deficit for the 21st century. that is doing high-speed rail to get us into the 21st century and keep us competitive. you are looking at a $4 trillion
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infrastructure deficit. what was the republican response to that? to cut 40% from an anemic infrastructure. if we come together -- a number of businesses agree with us. big business agrees with us. labor agrees with us that we can, should, and must invest in infrastructure to get the country going. it is a job creator. if we have strong buy american provisions, it has good implications. we have manufacturing and design and all of those things get pumped from this stuff. we are talking about doing a $10 billion fund from our pension fund that we can leverage five or six times.
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there is an infrastructure thing to do buildings. we are going to do this building to make it more green and more efficient. we are taking our pension money and doing that. we cannot do this without the federal government leaving. we cannot get up to scale. what you have is the republicans saying, we will not increase any taxes whatsoever. think about that. if that is the case that we never increase taxes again, america is at its zenith. it must start down. infrastructure will continue to decay. the more infrastructure decays, the less competitive we are. the less competitive we are, the more jobs go overseas. the more manufacturing jobs go overseas, the more research and develop a goes overseas. the more research and development goes overseas, the
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less competitive we are. we need to break the stranglehold that the house extremists have on the house. infrastructure is good for the country. it creates jobs. it makes us more competitive. it is everything that is right about this. they are saying no. we are trying to do things privately. we are working with a federal infrastructure bank to try to create that so that we can leverage federal money with private money to get these projects going on the scale we need to get it going to make our country competitive and create jobs. >> congressman levin, there have been a number of proposals on the hill to establish an infrastructure bank. are you in favor of establishing a national infrastructure bank? cardoza votes going to go anywhere? >> the answer is yes to the
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first and no to the second. i will tell you why. we are in a crisis that has to be resolved. the basic issue running through much of this is whether we essentially say to everybody, go it alone. or we have a public/private partnership. that is the basic issue. the infrastructure bank is tied into this. it means the kind of partnership that rich was talking about. it is interesting that groups come and say to us, do something about this stalemate. but when they go back home, they do not raise their voices to help us break it. >> bob, i want to go back to something be congressman said
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about eight discrimination. -- the congressman set about age discrimination. they are up against it if they are out of work trying to get back into the labor market. you are 60 years old. what are your views about what is going on with older workers? what are you hearing from others whether they are friends colleagues neighbors or anything else that are 55 or older and are out of work? >> the thing that concerns me more than anything else is that, for a long time i have heard that it is illegal to discriminate with regards to lapage. you believe that for a long time when you are younger and you are working. when you hit that eighth and you start going through difficulties, it becomes obvious and youackthat age,
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start going through difficulties, it becomes obvious. companies are losing people with experience and people with solutions when it comes to solving problems. that is why older workers do not get laid off as much as other people. when you are unemployed and you are older, that does not apply. it works against you. if you are applying for a job and there are 40 or 50 applicants, and 15 of them are under 40 and have college degrees or advanced degrees, and guess who is going to get the job? it is frustrating and you know that your life experiences and your experiences are in solving problems. it should be an asset to an organizations who have younger employees that don't have a lot of experience. i can remember 30 years ago, that was a huge factor, having
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someone further up in the chain who had experience and would pass that on to younger employees to make them better salespeople. it does not seem to be a factor today. >> shonda, it seems that workers in general are being treated with less respect than we have come to expect over the past several decades. you were let go. you had not done anything wrong. your employers made it clear they do have not done anything wrong. and how quickly you were off of the premises. -- explain how quickly you wore off of the premises. >> i found out that if you have
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been unemployed over one year, no one wants you. that is another point i want to bring up. it is totally unfair. on that day, i walked in and sat down. i was told i would be put on a big project. i was going to the process of getting stuff ready. my supervisor not on my cubicle and said, can you follow me? i said, is there something the matter? i am tried to get this set up and ready to go. he said, follow me. he said, are you going to lay off? he did not say anything. i remember saying, wow. i followed him and we went down and the human resources person was on a conference call. i did not hear half of the things she said. all i heard was, you are going to be laid off.
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you need to get this ready. i turned around and my supervisor said a few things to me. we went upstairs. i was grabbing a few of my things. i was walked out of the door. >> you were not even allowed to come back the next day? >> no. it was basically over. i gave them 10 years of my life, my loyalty. i was scooted out of the door. i have heard worse. people not even -- i do not even understand. a lot of companies have lost respect for their employees. there is no reason for it. >> you made it clear at the beginning of the program that
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there are things that can be done to stem this terrible tid e. in the broader picture, if we really wanted to do something about unemployment and reinvigorating the economy, what are some of the things that could be done? >> that is a hard story to follow. okay, there is a long list of things we could do. the most important thing we need to do it is things that are going to maintain demand in our economy. one of the things we see each month is that there is a survey done by the national federation of independent businesses. not a left they represent smalls all across america. they have said that our biggest problem is sales. in their june survey, they
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finally brought that point into their summery and started saying, people are worried about demand. they are worried about sales. if i could do whatever i wanted, it would focus on demand. you could do that in a bunch of ways, more investment on an -- in education, more money out to the states. keep teachers and state and local government workers at their jobs. we need to push back on the cuts that are being made to unemployment insurance. there are 19 states that have cut back on their unemployment insurance. not just michigan, although they were a leader in this period when the benefits expire in december, i am concerned that of will toot a lot of
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continue them. we report the headline numbers. 18,000 people gave a job last month. what is going on is that millions of people are losing their jobs and gaining jobs. 18,000 is a net number. if we can do things to keep those people on the job, that can solve a lot of our problem. there is a work sharing bill introduced by senator reid that was introduced this week that would allow workers who are -- would allow employers to cut back on hours and allow people to get unemployment benefits to make up for the differences in their income. there are other policies we can go through on that.
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there are two other points i would like to make. as i look out into this audience, i see the faces of many people and organizations that have long and fantastic jobs agendas. we have been doing this for years. this has been a crisis that has been here for some time. there are great ideas for things we could do. one of the challenges we have given ourselves at the center for american progress is to come up with things we think can create jobs and would be politically possible. these are difficult meetings that we are having. the bandwidth for what is politically possible is that you cannot spend any money. it is not clear how you can increase demand but not spent any money. there are things you can do on the margin. we have talked about helping students out of debt.
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let's lower interest rates. these are going to be on the margins. they will not solve the problems. the challenge is that we continue to have this big problem. we have had it for quite some time. the economists appear to be in some agreement on what we need to do. it is up to the world of politics to make that happen. >> which, he made a comment that has political implications. -- rich, he made a comment that has political implications. you say it will be difficult to motivate your members. that is going to be a problem for president obama. can you top a little bit about that? >> in 2010, it was tough to get people motivated. we were successful in getting them out by telling them there was a major difference.
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the problem now is that the debate on the deficit is subsuming everything. nobody is talking about job creation. the president is not talking about it. the senate has started talking about job creation. when you go back into the field, our political program runs on volunteers. the volunteers can be enthusiastic or non- enthusiastic. the more enthusiastic they are, the more that if we become. it will be a little more difficult this time. when you have people talking about extending tax breaks for millionaires, but not being willing to protect social security or medicare or medicaid, as heather said, that has wide-ranging implications
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for the economy. if you take benefits away from any one of those, money is diverted from demand into just living. they have less money to spend. it spirals the economy down. that is the central debate. it will be tough, but not impossible. it will be tough for us to motivate our members across the board. it will not be with a party message. it will have to be a candidate- specific. there are friends out there and there are acquaintances out there. the acquaintances say, we love you. good luck. in this election, we are going to say to them, we love you and good luck. [applause] to our friends, it will not be hard to motivate them. they will know. our members know that congressman levin stands up for
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them day in and day out. he fights for them on everything. senator sherrod brown stands up for them. for france, we will be able to motivate them. or friends ---- for friends, we will be able to motivate them. >> rich, you have included a note on the importance of opportunity and the importance of fairness. the importance of community. these are the figures about income growth from 1976 to 2007. 50% of the income growth in those 30 years went to the top 10%.
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58%. 1/3 went to the top 5%. 20% of income growth in those 30 years went to the top 1%. nearly 10% went to the top 1/10 of 1%. we need to talk to our fellow ancestor citizens. this is the land of opportunity -- we need to talk to our fellow and sister citizens. when income is so tilted in favor of a small minority, it challenges the growth of the middle class in the united states of america. i come from michigan. without a collective bargaining, there would have been no decent wages. it would have been no decent health care. it would have been no decent
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pensions. now the challenge is, with the way income has been distributed, these attributes that were part and parcel of what made america a strong middle class country remembering those who were not yet in it -- that is the challenge we face this year and the next. >> those are great statistics. i would like to add two more. you talked about income. we have seen this divergence between wage growth and productivity growth. workers used to see the same increase in their wages as they were seeing in what they were producing in productivity. that diverged about the time i
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was born. it has been quite some time since we have seen that divergence between productivity and wage growth. what we need to remember when we think about that is that america is a rich country. we continue to get richer and richer. it is the middle-class workers who have not shared in it. as we think about jobs and what we should be doing, there is a lot of rhetoric around belt- tightening and it is hard for families. it is not hard for everybody. there is well be created. how we can make that work for everybody needs to be part of this compensation. we are creating value here. it is going to the top. we have to figure out a way to share it with the middle class again. >> i would like to build on what have their -- what heather and the congressman have said.
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the interesting thing is that the people in the bottom two areas at wages that were rising faster than the people at the top. the american labor movement represented about 40% of the workers. we were driving wages for union and non-union workers. workers were getting their fair share, about 40% of us. from 1973 to today, wages have stagnated and productivity has gone up. if you look at productivity and wages, that gap is increasingly going to be people at the top. we are down to 11.5% of the people right now that we represent in wages. sander gave you the figures for 30 years. let me give you the figures for the last 20 years.
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they are accelerating. in the last 20 years, the top 10% has gotten nearly all of the income gains. the top 1% in the last 20 years has gotten 56 sign -- 56% of the income gains. one person in every thousand has gotten 30% of the income gains in the last 20 years. it is getting more concentrated. it was not by accident. it was in the mid-1970s when ronald reagan -- the early 1980's when ronald reagan and margaret thatcher did a thing called neo-liberalism. most americans do not understand it. they think it has something to do with being a liberal. it has nothing to do with it. it is the opposite.
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anything that distorts the marketplace, to get rid of it. collective bargaining distorts the marketplace. get rid of it. they went after all of those regulations. you saw the result of it. we had an economy that was not self correcting. it was not adjusting. we will get back to that if we do not change this and get more of a share of the income that is created in the country going to average everyday people so they can spend the money and create the demand that actually grows this country. that is not happening right now. >> heather, i would ask you -- the conservatives and the right wing will tell you there is no need to be concerned about this. concentration of wealth, economic inequality. there are winners and losers in this society. why should anybody care?
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tell us why we should care about that. >> we should care for two reasons. we live in a democracy. on that alone, we should care about that. i am an economist. i am not a political scientist. you can talk about that amount yourselves. caring about inequality is important for our economy and economic growth. one of the things we have seen is that as inequality wide and in the united states, there are reasons to believe that has an impact on how well our economy performs overall. as we saw the hollowing out of wages in the middle for a man in the 1970's and 1980's, you saw families having wives work. you saw this increase in duel- owner families.
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-- dual-owner families. wages were still not going up even though they were working longer and harder. there are implications for children's well-being and well- being for the sick. it also created the opportunity for families who were trying to just keep up. as we see regulate our financial market and said you can do -- as we deregulate d it our financial market and said, you can do whatever you want, families were taking on more debt to keep up with their standard of living. there is this area of
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interconnection between inequality and how we got to this economic crisis and how unstable we have become. there is this great new research done at the imf that pointed to countries that have more equality and have locker spells of economic growth. their growth. last longer. we should care in terms of economic growth. that is one last point. in terms of the politics, there was an interesting -- he did it is wonderful speech in luxembourg last summer looking at this question, the
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intersection between inequality and wages. he highlighted interesting research from political scientists. as we become more equal, it has led to this polarization in terms of our politics. i am not a political scientist. i think it appears to be something to that. we should be thinking more about how that is playing into what is go on in washington in terms of who is being elected and how they are being elected. >> in our last few minutes -- i agree on the inequality thing. societies that are more equal do better in a range of areas. the united states is among the most but equal of the advanced nations.
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-- most unequal of the advanced nations. i will go back to you, rich. is president obama a friend or an acquaintance? [laughter] >> he is a second cousin. [laughter] we put him in the category of a friend who gets delusional once in a while. >> i wanted to ask you to talk a little bit about the obama administration's approach to the employment crisis in general and the concerns -- the employment crisis specifically and the concerns of labor in general. >> i guess i have to go back a little bit. i have to go back to the original stimulus program. the original stimulus program
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was to banks small. we have to remember -- the original stimulus program was too small. it was set at 8.5% unemployment would be -- it was said that 8.5% unemployment would be the highest. it went to 9.5%. the tax cuts generated about $1.40 per dollar of investment. -- $1.40 per $1 of investment. -- $1.04 for $1 of investment. you had a stimulus package that
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was too small and it was drained away by 1/3 because it went into these tax cuts that most people did not even know they got. i used to go to meetings and say, how many people know they got a tax cut and two or three people would raise their hands. if the republicans had done it, they would have a neon sign when you open your check say, tax cut from the republicans. obama did not do anything like that. it started creating some jobs, some that were shovel ready and some that were so. there was a structural problem in it. they said the jobs had to be done in 18 months. that meant they were small jobs. the big jobs would have been a big job creators and they were not included. i think he made a strategic mistake whenever he started
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talking about job creation and deficit reduction in the same sentence. people got them all jumbled up. here we are talking about deficit reduction with no talk about job creation right now. that was his strategic mistake. he should have extricated themselves. he still should. that will only spiral us down work. -- debt will only spiral us downward. all of the cuts an austerity programs. look at greece. the deeper their austerity goes, the higher their debt goes. this was supposed to be a program to get them out of debt and the recession. it is pushing them in the opposite direction. all of the talk about debt reduction at a time when we have eight jobs crisis and 14 million people out of work -- a
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stop crisis and 40 million people out of work for the law period ever -- you made history, shonda. he beats to talk to people and let them know that he is going to create jobs. -- he needs to talk to people and let them know he is going to create jobs. i resent the fact that some of these politicians like scott walker and people like that are saying this is the workers' fault. [applause] somehow, america's workers were unable to compete in the world and they caused these crises. we forced those bankers to loan all those billions of dollars. that is the most ludicrous thing i have seen.
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for any of the press to be of any kind of credence or any kind of legitimacy to that argument calls their " it shows and to question -- calls their credentials into question. >> the republicans really seem to have captured the narrative that the stimulus failed and monetary policy failed and that what we need are more tax cuts and that spending is going to be harmful ,etc. l, etc. is it too late for the democrats to counter that narrative about 2012 is getting closer and closer. >> i think we are trying. it is not easy. the republicans have had a simple message.
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all tax cuts work. if you touch the tax cut for the wealthy, it will impede growth. i think we have one thing going for us. most people in this country do not believe it. most people in this country's sense -- in this country siense that maintaining tax cuts for the wealthy does not encourage economic growth. we are in a difficult position because of the rise in the deficit. it is up to us to try to thank a clearer picture and inject into this debate the basic fact that
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most economists agree with. if we do not promote jobs, we will not be able to get a hold of the deficit. >> ken obamas gets reelected if the unemployment rate is 8.5% or 9.5% next year? -- can obama get reelected if the unemployment rate is 8.5% or 9.5% next year? >> yes. but that is not where to leave it. i do not know what cameras are here or what reporters are here. i have no idea where you are from. shonda and bob, if i might call you by your first name.
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they represent the challenge faced by this country. they really do. you have worked hard. those who say that unemployment compensation is an incentive for not working should talk to you. the challenge before this country and before the president is to illustrate that we have millions of people in our country who have worked hard since they were in their teens, who have been laid off through no fault of their own. it is up to us to provide the balance to build economic growth so that you can get back to work. if you do not go back to work, it will not work for america. somehow, if we could just have you go on to our -- go on tour.
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we have to have some confidence that we can get this message through meetings like this. i have a sense of optimism. i am not sure what the unemployment rate would prohibit the election. election.- prohibit re we must take the steps now to get america back to work. >> thank you panelists. [applause] we are going to open things up to questions, hostile and otherwise. right in the front. let's start here. >> this is probably one of the
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best presentations i have seen since we have been suffering. shonda and bob, you describe to us where the american dream has gone, straight down the pot. it is not about the dissemination of the middle class. those who are working are the working poor. the piece you describe with the difficulty of struggling and putting your self-esteem inside. we salute you for speaking out. second of all, we want to say thanks to richard trumka, to heather and congressman levin for giving that fight back or what we have to do. you have given a clearer understanding that what the press has been doing for the last year-and-a-half.
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to be able to think after this is the bonus we have gotten from this session. i want to thank you. >> thank you. yes? >> this is really to president trumka. you have been encouraging to all of us. great panel. in 2001, the united states has run a trade deficit. congressman levin, it has been said that the trade deficits are a key part to contributing to the budget deficit. we are outsourcing be wealth creating part of our economy. dealing with the trade problem is an important part in dealing with the jobs crisis and the
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budget crisis. and yet, we do not get the media focused on the trade deficit as part of this problem in any way. we have got to understand that when you are running neck exports and deficits year after year, you are draining well out of your economy and you are not creating jobs in this economy. >> i am tempted to say amen. for eight years under george bush, even the feeble laws that we have were not being enforced. we took on a case and said china was openly cheating. there were sanctions against them.
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we created 3000 jobs immediately. tires. china was cheating. we created 10,000 tyre workers because we were playing on a level -- tire workers because we were playing on a level playing field. it is even tied into the tax code. the tax code encourages people to take jobs offshore and keep the money offshore. the tax holiday would be another disaster for america. trade is an important part of it. the tax cuts as well. if we lose manufacturing jobs, we lose research and development. as of last december 31, we lost 24,244 manufacturing plants in this country.
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those were good play -- good paying jobs. when you lose a manufacturing job, you lose or or by other was down the road. -- do louis four or by other ones down the road. -- you lose four or five other ones down the road. >> my question has to do with the free trade agreements with panama and colombia. i questioned is forheather and -- for heather and congressman levin. do you think these trade agreements will help economic growth in the united states? are you for them or against them and why? >> korea would lose 159,000
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jobs. it is too large as 14,000 jobs we would lose. colombia is a special category. forget about the economics of it. 51 trade union members were assassinated in colombia. the most dangerous person -- the most dangerous place to be in the world if you are in a trade union is colombia. is 51 ceo's had been assassinated last year, would we be clamoring for a trade agreement or clamoring for the rule of law. congressman levin thought to get the work plan put into preliminary language so that it had enforceability. as it is, colombia lacks the ability or the will to enforce the rule of law and to protect trade unions. the work plan that the president agreed to was an improvement. after the agreement is signed,
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there is no way to enforce it. they could on their nose -- thumb their nose at us and there is nothing we could do. economically, it is a bad deal. the workers on both sides of the border disagree with it and they will fight it. >> i will add to that comment. there is new work by economists. i will point to a paper by a professor at mit. it shows the places that have had increased imports from china. the paper looks specifically at trade with china. there were job losses and wage declines in those communities. there is a burgeoning area of research that shows trade is not always good for employment and
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wages here in the united states. you never know what is going to happen until it has happened. the estimate on whether or not we would create a lot of jobs with panama and colombia -- there does not seem to be a lot of empirical evidence that that would be the income -- that would be the outcome. >> this relates to the colombia agreement and the action plan. it has real promise. i have insisted that it must be part of the free-trade agreement. this has not been understood widely enough. why is the american labor movement interested in workers'' rights provisions and trade agreements apply to workers in other countries? there is a basic issue here.
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people who care about our workers need to care about workers elsewhere. that is a basic premise. but also, it is not understood why it is so important. it relates to the struggle we have had in terms of trade agreements with latin american countries. there needs to be the basic international standards in trade agreements enforceable for these reasons. first of all, it is important for the workers in other countries. secondly, it is important for the development of middle- classes in those countries. the countries that have not paid attention to the development of worker rights in the middle class have ended up with the authoritarian regimes. most of the people do not benefit from the economic benefits. it is also important for our
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companies. they need to middle-class people in other countries to buy our products. it is also important for the workers in this country. there is a basic principle. the workers in our country should not compete with workers in other countries whose countries to press their rights. for all four aspects, it is by no -- it is vital that there be enforceable workers' rights provisions. it is clear in panama. with colombia, a new regime needs to put down an action plan on worker rights. there is resistance to placing that clearly within the colombia free trade agreement. in my judgment, that is unacceptable.
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>> another question. can we go to this side of the ron? right here in the front. we will go -- and we go to this side of the room? >> my question is this. how do we stop the habit or disease in this country for debasing the public worker? it makes it easier to cut important public programs because we are cutting public workers. mr. restarts when your job -- misery starts when your job is lost. we need to put as much effort in preserving jobs as we do in creating jobs. we need to stop this country's horrible habit of the basing -- of debasing the public worker.
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>> great question. i would like the congressman and then rich to respond to that question. >> i will do this quickly. i was a labor lawyer. i called wayne state university. a building trade union had the cards of two workers. they said, we cannot what -- cannot recognize the union. i said, why can you find yourself as to representation by a union? is said to me, it is based on english law. the king can do no wrong. [laughter] that is what i was told. i chaired the labor committee
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and we wrote the most -- first comprehensive labor contract in this country. if public employees have not had a collective bargaining all of these years, they would not be such a vibrant part of middle- class america. we need to stop pillorying the public workers of this country. [applause] >> there is no question about that. they have been used as a scapegoat issue after issue and in state after state. scott walker and governor christie in new jersey. public employees are not overpaid. in wisconsin, the higher your degree, the more underpaid you are. if you have a ph.d., you get 35%
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less than a ph.d. in the private sector. the pension program. we were told they have outrages pensions. a penchant average $19,000 a year. america stood on its head. when we look at a group of workers to say they have something and other people don't, they say, in america, we should take it away from those that have. when we were at our zenith and people did not have something, we look at them and said, why not? how can we get it for them, not how can we take it away from those who do. heather can tell you the implications that has. fewer jobs, less growth and the spiral continues downward. that is one thing.
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we are talking about preserving jobs. i should have said is what we were doing on -- i should have said this when you ask me what we were doing on infrastructure. we are training 40,000 people from the community to do green tops and retrofitting. -- we are training 100,000 of our workers so that they cannot do just one thing in the grain economy, but -- green economy, but everything in the green economy. we provide more skills and education than anybody else in the country for just that reason, to try to preserve those jobs. i would ask you, and everybody
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here, when we hear people making jokes about public employees, we should stand up for them. they are the ones who make the world go around. they are in your hospitals. they rush into a burning building. they take care of your sick mother, you're sick dad. >> they teach your kids. >> they teach your kids and your grandkids. and they plow the roads. >> easy there. >> i did not say great grand kids. [laughter] >> there are influences -- the same people who brought us the
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financial crisis, and i do not think it was people barring more than they could afford, it was the whole -- borrowing more than they could afford, it was the whole financial system beginning with the repeal of glass- steagall that led us down that path. those same people are now fighting raising the debt limit. both of those have the same effect, which is seriously damaging the american economy. that same group is taking their money and investing in overseas markets. their interests are not in the strength of the united states economy. it is in access to profit wherever it can be found. a strong america does not give them that kind of access. that is a huge white elephant in the conversation.
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here comes the question. the other side of the coin is that there are real structural changes in our economy. one of them is that $1 of gdp has fewer workers associated with it. the other is that there is a bifurcation of the work force in terms of high-end and low-end. >> seriously, we need a question. i'm going to have to cut you off. can someone tell me if we have an al franken site in the house? >> the question is, in days gone by, one of the things we have done is increase the mandatory age of education, and that takes people out of the work force. >> seriously. >> i question is, what is wrong with doing that now -- my question is, what is wrong with doing that now? in addition to investing more in
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education and giving all the workers access -- >> i do not understand what your question as. >> the question is, as one solution -- there are others. that we expand the minimum age -- it is now 16, take it to 18, and add four years of college. >> i'm really sorry. you had an opportunity to make your statement. i think people understood what you said. but i have got to stop it. next question, right here. >> how important is it to fixing the job crisis in america that obama be reelected in 2012? >> that is a good question. [laughter] congressman? >> ivory said it is essential. >> rich, -- i have already said
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it is the essential. >> rich, do you agree? >> keeping some coherence the and reality to economics is important. each one of them on the other side simply says cut, cut, cut. when you ask them what their jobs program is, it is cut, cut, cut. cutting does not create jobs. i think it is important -- i think it would be more important if he focused more on jobs from the run-up and afterward and said, i am not going to listen to your chatter. i'm not going to listen to your sound bites. i'm going to focus the century on job creation and put 14 million people back to work. we will solve your deficit problem and a whole bunch of other problems. that is what we're going to do. it would be great if he would say that. >> over here. >> two very quick questions.
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i guess they mostly pertain to the representatives since you can take action on this. it is no surprise that there are crooks on wall street. i'm wondering when you're going to fight to get a glass stiegel sed -- glass-steagall pas sooner rather than later. the other thing i wanted to point out, since obama has blatantly come out and said that he wants to put your social security and medicare, which is socialty -- butchere security and medicare, which is a pretty right wing thing to do, will the congress come out against that? >> in all fairness, the president has said the social security and medicare are on the table in these discussions. i'm not sure you can say that he
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is going to butcher them. anyway. >> i'm not sure what group you belong to. i think we need to be careful to be accurate. the president has never said he will butcher social security or medicare. in terms of glass-steagall, i think we need to focus on trying to enforce dodds frank right now. let me just say that not a single jobs bill has been presented to the house of representatives. we had a debate on the ag bill, and there was an amendment that not a single dollar could be used by the ag department for the enforcement of dog-franc. that past -- dodd-frank.
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that passed, and virtually every republican voted for it. that shows what we have in the house of representatives. the differences between the two parties are deep and wide. so, it all -- so, when it comes to re-regulation, when necessary, let's fight those who say the answer is to deregulate everything. what side are they on? what side are they on when they say not a single dollar to implement dodd-frank, not a single dollar to address the swaps problem. whose side are they on? i will fight anybody who tries to obscure those differences,
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because we see them every day on the floor of the house, every day. that is where the battle is. >> just very briefly, there is a fight going on right now on dodd-frank. they are doing everything they can to weaken those regulations. i have got to tell you, the secretary of the treasury weighed in on the wrong side recently and exempted for in derivatives, which is a big chunk of that regulation that needed to happen, and now they are exempt because secretary geiger said that -- secretary geithner said the definition should not include them. that was a big setback for all of us. if you want glass-steagall back, dodd-frank is the substitute, and the regulations being written are either going
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to be broad enough to cover the situation or they're going to be contracted so much that they are neutered. each one of you needs to weigh in on those regulations remaining strong. there is a lot of fighting going on over that right now. >> question way in the back. you guys yourive exercise. >> the cheaper seats. >> i think we started the discussion with the deficit, and i think if we look back to right after the depression and world war ii, our deficit related to the size of the economy was about 125% of gross national product. we're looking at about 77% now. we came out of the 1950's and 1960's by manufacturing and by
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having a booming, a strong economy. with that, i have to ask, i have heard a lot of good stuff about columbia, but i have to ask, south korea trade agreement, lowers the content standard to 35%. that means 65% of a good can pass through from china, north korea, or actually from mexico into the united states and the called a south korean good -- be called a south korean good or an american good, and it gives up power supply chain, and that is where the jobs are. -- gives up power supply chain, and that is where the jobs are. we do not need a model modeled
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after the global auto industry. we need a model modeled after the american aviation industry. thank you. >> by the way, this is not the time to discuss that, but we will be discussing that. some of your facts are not correct. but we will have plenty of time to discuss that. >> de want to -- ? >> no, i do not think we need to get into a long debate. the north korean reference is simply incorrect. there are differences of opinion about that, but i think it will not help if there is a distortion of the facts. i will be glad to discuss it with you and we will have plenty of time. >> are right. >> i have been following american history since 1965.
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i think we have to restore fairness. it is a good concept. you're talking about ways to compare profit measurement. one thing you have to think about [unintelligible] that is why you have a labor problem, and unemployment problem. those people who have a highly in come, who are realtors of people's house, they're taking the jobs. we have to change the productivity and get rid of negative productivity. if you want to create a job, you have to send the money to where the jobs are needed. those people who create the jobs
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are destroying our economy. we have to have money where the jobs should be and where the benefits should be. homes. away people's [unintelligible] >> thank you very much. we're going to have to wrap it up here. i appreciate your comment. i appreciate the panelists one and all. i hope you can give them around of applause. -- a round of applause. then, if you be kind enough to welcome senator al franken. [applause] >> thank you. i thought the panel was
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brilliant. i'm sorry. i did not hear a word, but i can imagine some of the things, and i will probably end up repeating what the number of folks on the panel said. heather actually testified to a committee that had a couple of hearings on the middle-class. they have been overshadowed by some other stuff that is going on. this current debt crisis, of which is upon us, whether we're actually going to become a dead the nation -- deadbeat nation, and some of us feel that we are currently in a situation where we have certain -- the
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republican party holding the president and the democrats in congress hostage, and holding us hostage with the debt ceiling, knowing that in the game of chicken, that the irresponsible and, dare i say, irrational player has a distinct advantage over the rational and responsible player. i think it is very unfortunate. i am very pleased to be here at the afl-cio. i am a member of the afl-cio. i am a member of four unions and proud to be. i am a member of the writers guild, of the american federation of radio and television artists, of the screen actors guild and of the directors guild.
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i still get some residuals that were negotiated, the residual payments schedule was negotiated union. jun i walked the picket lines to make sure we got those, so every time "trading places" is shown, i get about $12. [laughter] that is a public service. [laughter] to me, there are so many wrongheaded things going on right now. heather spoke at a panel on the middle-class, and i believe it was tethered to be said that the purpose -- heather who said that creating a middle-class is not an end unto itself.
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the middle class is the engine of our economy. the middle-class in our country has created demand, has created entrepreneur is, small businesses that are the of our economy. in a middle-class kid. i dad did not graduate high school. my mom did not go to college. i grew up in a two bedroom one bathroom house. i considered myself the luckiest kid in the world, because i was. i was a middle-class kid growing up in america in the 1950's and 1960's. there was wealth if you wanted it. and i felt that i could do anything i wanted to do. i felt that i could be a comedy writer and do comedy, and become a senator, in that order.
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[laughter] that was always my plan. you know, there is a lot of talk about where we are in terms of debt. we have a serious debt crisis. the question is how do we approach it? we have 93% of our gdp -- our national debt is 93% of our gdp. that is a scary number. we have been here before. at the end of world war ii, it was worse. it was 127% of gdp. we had something to show for it. we had won world war ii. we also had some distinct advantages that we do not have now. we had europe and asia destroyed, so we had no markets
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right away. despite our dead, we started a market plan. -- debt, we started a market plan so we could help europe and create people to buy things. you need people to buy things, folks. rich people can only buy so much stuff. at a certain point, they just run out of stuff to buy, even rich people. and there are only so many of them. and then they save their money, and it sits on the sideline. we see that. we see a couple trillion dollars sitting on the sideline. why? because there is no demand. why is there no demand? because people are unemployed, under-employed, not being paid enough, wages have gone down, we know this. i know i'm repeating step that
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has been said. and it is -- stuff that has been said. and it is not because i'm like a mind reader. it is because i know what had to have been said on this panel. i know these people, i know what had to have been said. so, the idea that those of the very top, who now are richer than anybody has ever been, you know, we now have people who are richer than any people have ever been in the history of the world, and there is -- why they cannot pay a higher percentage of their income in taxes is crazy. [applause]
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and i -- listen. i, you know, those of us in the senate who are democrats, we talk to people who are rich. we go to fund-raisers and we talk to people who are rich. and you know, there are some of them who say, well, i do not know of any of them that i need who say they are unwilling to pay higher taxes. i know the republicans go to their own fund raisers and the different kinds of people, and i respect that. but there is no evidence that that works. my goodness. in 1993, when we had the deficit reduction package -- i know probably everyone on this panel remembers this -- president
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clinton said let's raise the top two levels. at $180,000, go to 36, at to under $50,000 go to 38.6. every -- $250,000, go to 38.6. every republican voted against it. they said it would cause a depression. said it would be be the democrat recession. he meant democratic recession. i do not know if republicans do not understand adjectives and things like that, or maybe he
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was just being rude. phil gramm said this will raise the deficit and kill jobs. john k. 6 said that if -- john casick said that if this works, i'll have to become a democrat. that is why we now have a democratic governor in ohio. did you know that? [laughter] i'm just going by his logic, because we have had -- because we had the longest period of economic expansion that we have ever had in our country, when we increase the marginal rate on the people on the top. so, it worked. not only that, it turned a record deficit into a record
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surplus. he took it from one bush -- a record deficit -- and turned over to the next bush a record surplus. after george bush became president, five days after george debbie a bush became -- george w. bush became president, alan greenspan testified to the senate budget committee and said we are in danger of paying off our national debt too fast. we are on a projected -- we have a projected $five trillion surplus going in over the next 10 years, and we very well may pay off the debt too fast. the federal government is in danger of having too much money.
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we are just going to have too much money, folks. and he said that what would happen as a result of that is -- because there would be some people holding onto their bonds and they would not be paid off at the right time -- we will have to take our excess money and invested in private equities, which will be disruptive of the markets and make them inefficient. because of the united states government having too much money. this is after bush became president. so understand that after bush became president, alan greenspan was warning us about this dire problem. and, you know, -- now, i do not get their economic theory.
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here is their economic theory. if you cut taxes, you'll automatically raise revenues. right? you hear that all the time. whenever you cut taxes, it raises revenues. they always say that. you hear that all the time. watch fox sometimes. [laughter] every time we have cut taxes, it has doubled revenues. that is sean hannity saying that as it is a fact. google it. he says it every day. then they also tell us that you have to cut taxes so that the government does not have too much money to spend. in other words, you know, reagan said it in 1981. you can tell your kids all you want that, not to throw away their allowance. the only way to do it is to cut
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their allowance. he said this. you can look it up. in other words, you had to cut taxes, cut the revenues so that the government would not spend the money. over norquist says it. you cut taxes so that you did grover norquist says it. you cut taxes so that you cut the government revenue. so these are mutually contradictory theories. every time you cut taxes, you increase revenues. and when you cut taxes, you decrease revenues. that is fun to hear. [laughter] and then bush of course came in and said, we are in danger of having too much money. it is your money, so let's cut taxes, because it is your money. we are running a surplus, so let's cut your money, cut to
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access -- cut taxes. then we started losing johnson went into a recession. he said well, we're in recess -- losing jobs and went into a recession. he said, well, we're in a recession, so we need to cut taxes because the economy is bad. so in addition to every time you cut taxes you increase revenue and every time you cut taxes you decrease revenue, there is also every time the economy is good you should cut taxes and every time the economy is bad you should cut taxes. this is the most absurd theory i have ever heard. but it needed one more element to be dangerous, and dick cheney provided that. paul o'neill went to him and said, this could hurt the economy. our deficit is exploding. cheney said, do not worry about
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it. reagan proved that deficits don't matter. bingo. so, what does he do? bush takes the biggest surplus in history and turned into the biggest deficit in history, hands-off a $1.2 trillion debt /projected deficit to obama, and an economy that, here it is. i have done my job. here it is. we are shedding 750,000 jobs a month. i have done my job. i will watch some ranger games. [laughter] i cannot believe these people
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had actually paid any attention to anything. my colleagues. so now, we have all this money sitting on the sideline. you know, and we have to -- look. we have to look at what we did. robert reischauer one of these hearings said, what -- robert reich at one of these hearings said, what country should we model ourselves after? the answer is, the united states of america. [laughter] we did this after world war ii. we invested in the right things. we invested in education, in infrastructure, in science and technology, in innovation, education, science and math education. i was a sputnik kid.
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in 1957 when sputnik was launched, i was 6 years old. my brother was 11. we were scared to death because the soviets were ahead of us in space now and they had nuclear weapons. my parents took us into our living room in minnesota and said boys, you are going to have to study math and science to beat the soviets. i thought that was kind of a big burden to put on an 11-year-old and a 6-year-old. [laughter] but we were obedient sons, so we studied math and science, and would you not know it, my parents were right, we studied math and science and we beat the soviets, my brother and me. [laughter] and the benefits of the space program are -- i was watching a debate during the last campaign,
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and the republican candidate for senator said that the government has never created a job. i noticed, ironically, that the debate was carried on satellite. [laughter] we build the interstate highway system. this is -- i just -- you know, so now i know, we're not going to get a big stimulus package. so i'm looking for different ways to -- different models to build jobs. you know, why are we not retrofitting residences, businesses, universities, buildings? in minnesota, we have our
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people in the building trades are just hurting, hurting, hurting. let's put them to work. we have a company in minnesota that builds huge air conditioning systems. they're building the air- conditioning system for the new world trade center. because they're such a big company, their credit worthy. they're able to borrow money. and what they do is, they just lend it to their customers and say, by our -- here. we're lending you this with almost no interest. by our air conditioning units, and within three-five years it will pay for itself, and the rest is profit. why aren't we doing that? we know we can pay for our
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investments in energy efficiency. if we have $2 trillion sitting on the sidelines, let's do it. let's do it. let's think of models like that. the people to work. -- put people to work. that does not cost any money, it is just win-win-win. they sell their product to industrial manufacturers. they lent -- a bar of the money -- barrault -- borrow the money, lend it back, save it and then they have money. on foreclosures. we have done this foreclosure
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thing in an idiotic way, i think. we should be helping people. i passed something called the office of the homeowners advocate. if any of us go back to our states, we find people that are in the program and trying to deal with their servicers. you cannot get the same person on the phone twice. you cannot get a person's name. bailey is paperwork. we should have someone -- they lose the paper work. we should have someone on the treasury -- in the treasury on your side. what is happening in congress is very frustrating. i feel like i have gone on longer than i should. week -- its -- i find the current situation sad. i find it senate leadership, senate republican leadership
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said right after the election that their number one goal was to make sure president obama was a one-term president. it did not say, it is to put people back to work. they did not say, it is to get our kids educated. they did not even say it was to balance the budget. it was to win an election, to win the next election. this was immediately after the last election. i'm sure sandy -- i know sandy did not come here thinking, you know what i'm going to do? i'm going to get elected and then work on the next election. that is not what the american people want from us. they want us to work together. they want us to work to improve their lives. they want us to work to make sure their kids are educated. they want to make sure that there are jobs. they want to make sure that we
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have the american dream. the american dream is to have a good place to live, make sure your kids are educated and have health care. have a secure retirement. that is the american dream. that is all it is. and by the way, during the clinton expansion, median income went up. poverty was diminished. made more millionaires than ever. good for them. we need a totally different approach and we need to not be playing high-stakes games of chicken in which not only is the american economy at stake but the global economy as well. i'm sure i have repeated. i'm sure bob has told many of the jokes i did.
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he is famous for that. [laughter] >> nobody can do that. >> thank you all for being here. [applause] >> senator al franken. thank you very much. thank you everybody for coming. it has been great. we really appreciate it. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> today on c-span, live from salt lake city, we will be covering the national governor'' association summer meeting with remarks from the governor of arizona and the governor of maryland. that starts live at 5:30 p.m. eastern right here on c-span. and our "newsmakers" guest this
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week will talk about some of the issues facing states. that is also here on c-span. live coverage of the nga continues tomorrow with the governor of nebraska discussing innovation and competitiveness. you can watch that live tomorrow at 1:30 p.m. eastern. meanwhile, on capitol hill, still no deal on the debt and deficit after last week's talks between president obama and congressional leaders. at a press conference yesterday, the president said he has told members of congress he once -- he wants a sense of what their plan is over the weekend. senate minority leader mitch mcconnell attempted to give the president the authority to raise the debt ceiling while bypassing the need for a congressional vote on the measure.
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you can check out the upcoming cut cap and balance bill online at c-span.org. tom coburn will lay out his plan to cut the deficit by $9 trillion over the next decade. he was one of the gang of six who left to the bipartisan negotiations. he will lay out his plan later on c-span. up next, the u.s. chamber of commerce held an event focusing on jobs, unemployment and economic growth. we will hear from the ceo of general of electric and a panel discussion about what small business owners think about government regulation. this is two hours and 20 minutes. [applause]
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>> i would like to extend my appreciation to stand and the chamber for organizing this event today. to inform our discussion today, the chamber has been holding listening sessions across the country. with small business entrepreneur is and local chambers, and we have also commissioned the study. as he also indicated, there will be an expanded discussion of that in just a little while. why do we do this? we did it in order to find out what our nation's job creators were thinking about the economy, what they want government to do, and most importantly, what is going to take to expand their
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businesses and hire more people. these main street businesses are telling us plain and simple to start hiring they need faster economic growth, and we need a change in course in washington. that is my message today as well. three years ago, we suffer the worst financial crisis and deepest recession since the great depression. and now, we're caught in the slowest and weakest recovery since the depression. in other recoveries, growth came roaring back, and with it, so did jobs. but that is not happening this time. this reality was brought home to us once again with a very disappointing jobs report released on friday. new job creation is -- has
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slowed to a trickle. unemployment is up to 9.2%, and it is up to 16% when you include part-time workers who cannot find full-time work and those who have dropped out of the work force altogether. that is where we stand today. to make matters worse, we have already tried the traditional tools that are commonly used to end a recession and to rev up an economy. the government has spent nearly $800 billion on the stimulus package. pushed interest rates down to near zero. fill the financial system with liquidity and pump primed the economy with new tax breaks and more deficit spending. and still, the recovery is weak. growth is slow and jobs are just not coming back in the numbers we need or as fast as necessary. so where do we go from here? what we do now?
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ladies and gentlemen, the answers do not rest with bigger government. the answers can be found in the proven principles of the american free enterprise system. we need to grow this economy in a big-time way, stronger and faster -- in a big-time way. stronger and faster economic growth is the best way to put americans back to work. to generate the growth and create jobs, we must clear away the impediments government has imposed. we must reduce the uncertainty that discourages businesses from expanding and hiring. we must stop wringing our hands and start acting quickly and boldly to solve our problems. we must recapture what america can do, that american can-do spirit, which will install new confidence in consumers and
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investors. growth will not solve all of our nation's challenges right away, but we can do a heck of a lot more with growth than we can do with out it. businesses will get more customers. government will get more revenue. more importantly, americans will get more jobs if we focus on growth. so, what must we do to get the stronger and faster growth we need to put americans back to work? i would like to suggest a few steps, some that can help create growth and jobs right away, and others that will help over a longer period of time. for a simple reason, there has been plenty of talk about these ideas, but precious little action. if one -- if there is one thing that we do not need right now in
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washington, in july, it is a lot more hot air. we need action to spur this economy and create jobs, and we need it now. if i can say something parenthetically, i was sitting at the table here talking to one of our staffers whose husband has a very interesting company in maryland. they were doing very well until they heard last week that four times this year -- it is a small company -- they will have to pay $200,000 more for their unemployment insurance. that is almost a million dollars on a compounded basis. these are the challenges when the government is employing people or supporting people. we need to do it in the private sector. how to read about this? what really works? first, let's start with -- how
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do we go about this? what really works? first, let's start with trade. immediate jobs are at stake. 380,000 of them. that is how many jobs we will lose to our competitors in a very short period of time, who have already cut deals with south korea and colombia. with these agreements in place, confirmed, we can create tens of thousands of jobs of our own. our negotiators should also reached broad agreement on a trans-pacific partnership by november. asia is the fastest-growing region in the world, and american workers and businesses can supply those markets, so let's get moving. our largest trading partner overall, or customer, it is the european union. we can generate up to about $120
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billion in new trade simply by removing tariffs on each other's products, not services, just manufactured products. that would be a down payment on a broader deal we could cut with such an important trading partner. that adds up to serious jobs. the second thing -- and we do not think about this very much -- is the subject of travel and tourism. a sector critical to the u.s. economy, to u.s. growth and u.s. jobs. this is a $700 billion industry that provides 7.4 million american jobs, and guess what? when foreigners visit here, they spend their money, and that is our largest export. we have not made that ease the -- ec -- easy in recent times.
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we need to promote american tourism to create jobs right now. we need to put the welcome mat back out. that means vigorously promoting what we have to offer, just like other countries do all the time. it means reducing the hassle factor of visiting the united states without compromising security. we should bring more countries into the visa waiver program, which is a budget neutral way of creating more jobs in the travel and tourism sector. our businesses tell us all the time that before they can hire more people, they need more customers. let's bring the customers here. 95% of the world customers live outside our borders, many in economies that are growing much faster than ours. they like american products.
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they like american culture. they like americans. and they have a lot of cash. so let's go sell them something over there, and bring them to use united states -- bring them to the united states as visitors and investors, and then sell them something here. it is a quick way to create hundreds of thousands of jobs in this country. the next subject, or the third issue, is very hard to address without upsetting people, but it is very important to think about. it is a critical industry on which american growth and jobs have long depended, and that is the housing and construction sector. housing remains very, very weak. low prices have made homes far more affordable than ever before.
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this is a big drag on economic growth, because families are unwilling to spend as long as their primary asset, their home, is under water and losing value. it is a big drag on jobs. housing and construction work is suffering from double digit unemployment, in some areas of to 30% of people that had those jobs are currently unemployed. there are no easy or nice answers to the housing crisis. banks have moved preemptively to modify loans for at risk are workers and government initiatives have tried to -- for at risk borrowers, and government initiatives have tried to encourage it. however, even with the assistance, some homeowners will have no choice but to go into foreclosure. we must face that reality, that there will not be housing market improvement until the backlog
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of foreclosures is cleared and the existing inventory is reduced. for their actions over the last two decades, politicians have already proven they have the ability to really mess up the housing market. still, we need their help right now. they should avoid the temptation to endlessly prop of those who will never be able to afford the homes they now live in. instead of delaying the day of reckoning even further, our policy makers should let the market take its corrective course. the sooner that happens, the faster this key section of our economy will recover and start building and hiring once again. very much related to that is the subject and the fourth issue of infrastructure. one way to put some of these
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construction workers back on the job is by investing in infrastructure. last year, the chamber released a groundbreaking study proving that investments in infrastructure can be directly linked to stronger economic growth. and i am not talking about wasteful stimulus projects driven by politicians. i am talking about the kind of thoughtful, strategically planned improvements that expand our capacity to grow our economy and compete in the world market. congress should act now to reauthorize the core surface transportation aviation and water resources program. they'll create jobs. with adequate funding so that states, communities and the private sector can execute, plan and hire. they cannot do that with an
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endless string of short-term extensions of these program. congress, the administration and the states need to address the rules, the disincentives and other impediments that have locked away potentially $190 billion in private capital that could be invested in infrastructure. unleash that many, and you could create a lot of jobs right now. and while i fully understand that high gas prices are a hardship for american families, we must also go boost -- also boost public infrastructure without adding to the deficit. the gas tax is a user fee. this user fee has not been increased since 1993, 18 years
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ago. let's not forget the gas mileage for cars and trucks has increased substantially since then. that means that as yuli efficiency increases, we -- as fuel efficiency increases, receipts to the highway trust fund decreases. let me put it to you in english. a truck that drives all over this country has more than double the miles per gallon it had 18 years ago, and there are more of them, so fundamentally, we are paying about 40% of what we used to pay to repair, upgrade, roads, bridges and transit. it does not sound very sensible, does it? the result, a rapidly crumbling infrastructure with less and less money to rebuild it, and under these circumstances, it is not unreasonable to suggest that we face in a modest increase in the gas tax over time. now, we talked about housing.
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we talk about infrastructure. these things are related because of jobs. let's talk about domestic energy. we should also produce more energy of all types, use it at home and sell it abroad. we have got plenty of it. people did not think so for a long period of time, but we have a lot of it, allowing american industry -- but we have a lot of it. allowing american industry to go get it would not cost the government a cent. it would create jobs, enhance our national security, and release us from the grip of some unfriendly governments. recently i wrote a letter to the president outlined -- outlining simple steps he could take to move us in that direction. i noticed that the u.s. department of energy has estimated that the united states has in excess of one
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trillion barrels of oil off our shores alone. we also have huge natural gas resources. in fact, we have our experienced and natural gas renaissance in this country. increased domestic production has driven natural gas prices down, and that has brought some manufacturing back to america, and i believe could surely bring most of the chemical companies that moved to the mideast or otherwise to act against natural gas, but to come back to the united states. so let's keep things moving in a positive direction. by some estimates, increasing access to energy resources could create an additional $150 billion in federal and state revenues and add more than 500,000 jobs in this country in a relatively short period of time. we must also continue to build
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the energy infrastructure in order to deliver affordable and reliable supplies of fuel and power. which will also create a lot of jobs. that is why the administration should allow the construction of the oil pipeline connecting canada and the united states refineries in texas. that one project alone would create 250,000 jobs and involve $20 billion in investment in the united states. this is not a complicated decision. the sixth issue, that i think we should look out for immediate improvement, is the question of regulatory uncertainty and reform. you have heard me mention the need to remove regulatory impediments and address uncertainties and delays in getting projects approved. indeed, i